Recent speculation suggests that the Venezuelan regime may secretly hold Bitcoin worth as much as $60 billion. But the claim appears to stem from speculation and second-hand reports, with a lack of reliable on-chain evidence linking the funds to state-controlled wallets. As a native Venezuelan who has been mining Bitcoin in the country for years, I don’t believe the Venezuelan regime has a secret cache of Bitcoin, and I’ll explain why.
First, let’s break down the accusations. According to multiple articles, the source of the regime’s Bitcoin reserves is:
1) A large amount of gold was sold in 2018 and converted into Bitcoin;
2) Oil revenues are denominated in Bitcoin; and
3) Stolen/impounded mining equipment.
I do believe, and there have been reports, that Venezuela has received some payments from crypto oil sales. I do know it stole mining equipment – some of which belonged to my family. I have yet to see reliable evidence that gold sales in 2018 were converted to Bitcoin, and given what we know about the major players, this is unlikely.
Why is the alleged $2.7 billion gold sale in 2018 unlikely to be converted to Bitcoin?
The mastermind of the operation and current Minister of Industry and National Production Alex Saab was detained by the United States from 2020 to 2023. Former President Joe Biden’s administration released him back to Venezuela in December 2023 as part of a prisoner exchange. It is speculated that the value of BTC he controls at the time of his release is estimated to be between $10 and $20 billion.
For context, the Central Bank of Venezuela’s listed reserves were approximately $9.9 billion at the time of its publication, and these official reserves do not include any publicly disclosed BTC. If Saab did control about twice the reserves reported by Venezuela’s central bank before his release, that would certainly be inconsistent with the public record. Furthermore, Szabo has been detained in the United States for many years and has limited ability to direct complex financial operations, not to mention the absence of any trusted on-chain attribution linking a wallet of this size to him or the Venezuelan government.
Why are proceeds from cryptocurrency sales unlikely to show up in Venezuela’s official reserves?
The regimes of Hugo Chávez and Nicolás Maduro have a long and well-documented history of extreme corruption. Venezuela’s extreme corruption does not add any meaningful value to the regime’s treasury. There are too many examples of corruption to list them all, but let’s focus specifically on SUNACRIP, the so-called cryptocurrency regulator set up by the regime. Back in March 2023, there was a scandal involving senior corrupt officials who personally embezzled billions of dollars through illegal sales of oil to state-owned oil company PDVSA. From 2020 to 2023, these officials stole an estimated $17.6 billion. In other words, any “profits” beyond what NOC needs to barely survive are likely to be siphoned into the pockets of corrupt members of the regime.
What about the benefits of operating stolen mining equipment?
The regime has a long record of mismanaging complex businesses — even strategic ones like PDVSA. Since 1999, in addition to confiscating and bankrupting thousands of private companies, it has destroyed its crown jewel, the state-owned oil company PDVSA. From 1999 to the present, the regime transformed Petroleos de Venezuela (PDVSA) from a world-class oil production company with a daily production of 3.5 million barrels to an anemic enterprise with a daily production capacity of only 800,000 barrels. Even if the regime steals or inherits state-of-the-art equipment, it cannot function effectively.
Another reason is the country’s chronic energy shortage. Despite Venezuela’s vast oil reserves, the country’s electricity infrastructure is in such bad shape that citizens across the country suffer planned blackouts of more than four hours a day, sometimes multiple times a day. The country’s electricity grid remains fragile due to chronic underinvestment, poor maintenance of infrastructure (especially the Guri Dam hydroelectric power station, which provides about 70-80% of Venezuela’s electricity), the loss of skilled workers due to immigration, and reliance on aging systems. This leads to unplanned power outages and deliberate rationing to prevent total collapse.
Unpredictable and unreliable energy sources present challenges when setting up large-scale mining operations in less-than-ideal conditions (remember, these are not pristine data centers we’re talking about here – the wear and tear on these machines is pretty severe, I’ve witnessed it firsthand).
In short, I do think there is Bitcoin in Venezuela. It’s just not in the hands of the regime.
