Venezuelan army turns to block reward mining for money

The Venezuelan army has begun block reward mining to secure funds, in a bid to stave off the effects of economic collapse in the country.

In the latest steps towards digital currency from the embattled state, the armed forces have established a new facility known as the Digital Assets Production Center of the Bolivarian Army of Venezuela, which has already started mining cryptocurrencies like BTC.

A video published on Instagram by a division of the army shows the new facility running ASIC mining gear, which is used to solve cryptographic puzzles in proof-of-work algorithms.

Describing the center and block reward mining as “unblockable sources of income,” General Lenin Herrera said the objective was “strengthening and self-sustainability of our units of the Bolivarian Army.”

Referring to sanctions against the country imposed by the United States, Gen. Herrera said the unit would provide an alternative to the “trust system blocked and controlled by colonialist interests.”

Venezuela has suffered from significant inflation in recent months, prompted by political turmoil, falling oil prices and the effects of COVID-19 in the country. The latest troubles come on top of decades of economic struggles for the country, which remains under heavy international economic sanctions.

The project builds on previous moves from the government in Venezuela to harness digital currencies for their own ends. Most notably, the government previously launched its own state-backed digital currency, the Petro, backed by national oil reserves.

The Petro was specifically launched to help evade international sanctions, and has been met with some limited success in the country, despite strong opposition branding the project unconstitutional.

Venezuela’s increasing reliance on digital currency has attracted the attention of the international community.

U.S. Admiral Craig Stephen Faller said the U.S. military was closely monitoring the regime’s use of digital currencies to avoid sanctions, suggesting this was already being used to fund other crimes such as terrorism and drug-trafficking.

See also: TAAL’s Jerry Chan presentation at CoinGeek Live on The Shift from Bitcoin “Miners” to “Transaction Processors”