Recent reporting has again raised questions about Venezuela's use of crypto, including claims around Bitcoin adoption, mining, and state holdings. Given the level of speculation, it is worth clarifying what is supported by evidence and what is not.
- Early Adoption of Crypto Driven by Hyperinflation
Venezuela has been one of the earliest and most active adopters of cryptocurrency in a sovereign economy, largely as a response to years of hyperinflation and collapse of the bolívar. Persistent inflation has led individuals and businesses to use crypto, especially stablecoins such as USDT, as alternative payment method and stores of value, with peer-to-peer trading volumes and adoption metrics ranking Venezuela among the highest globally.
- Bitcoin Mining Incentives vs. Realized Hash Power
Venezuela has long been cited as a potential Bitcoin mining hub due to heavily subsidized electricity costs, often denominated in rapidly depreciating bolívars, which in theory create exceptionally low marginal mining costs. Much of the country's power generation is hydroelectric.
In practice, however, Venezuela does not represent a significant share of global Bitcoin hash rate. Chronic grid instability, frequent blackouts, deteriorating infrastructure, and periodic government crackdowns on mining operations have constrained the scalability and institutionalization of mining activity. As a result, Venezuela's contribution to global hash power remains marginal despite strong theoretical incentives.
- First State Issued Digital Currency: Petro
Venezuela was the first country to issue a nationally backed digital token, the Petro, launched in 2018 and tied (in theory) to oil, gas, gold, and diamond reserves. It was promoted as a way to counteract sanctions and preserve "monetary sovereignty." However, it was not a decentralized cryptocurrency like Bitcoin and faced broad scepticism over transparency, liquidity, and actual backing. The state formally shut down the Petro project in January 2024.
- Gold Reserve Liquidation and Crypto-Related Speculation
Over the past decade, Venezuela has liquidated substantial portions of its gold reserves to generate hard currency amid sanctions, declining oil revenues, and domestic economic strain. Key reporting suggests:
Gold to Bitcoin Swaps (2018–2020):
- Reports indicate that Venezuela sold large amounts of gold from the Orinoco Mining Arc, estimated at 73 tons in 2018 alone, valued at roughly $2–2.7 billion at the time.
- Some analysts claim proceeds may have been converted into Bitcoin at an average historical price of $5,000 per BTC, potentially yielding ~400,000 BTC.
- The process allegedly involved complex mechanisms to obscure transactions, including: physical transport of gold abroad, use of crypto mixers, cross-chain bridges, and thousands of dispersed cold wallets.
- Activity is said to have tapered off by 2020 as reserves declined, forming the basis of what is described as a "shadow Bitcoin reserve."
USDT to Bitcoin Conversions from Oil Revenue (2023–2025):
- Venezuela's state oil company, PDVSA, reportedly started accepting up to 80 % of crude oil payments in USDT to bypass banking restrictions.
- Analysts speculate that a significant portion of these stablecoins was converted into Bitcoin to reduce exposure to freezing by Tether and other sanctions-related risks.
- Estimated inflows via this channel range from $10–15 billion, implying 150,000–200,000 BTC acquired at average prices between $20,000 $70,000 per BTC.
- This transition followed the collapse of the Petro token and coincided with allegations that ~$21 billion in PDVSA receivables were misappropriated, potentially diverted into crypto channels.
5) Rumoured 600,000+ Bitcoin Holdings
There have been rumours, repeated on social media and some crypto analytics blogs, that Venezuela may hold an enormous "shadow Bitcoin reserve" figures cited range up to ~600,000 BTC (estimated at approximately USD 30–40 billion at market prices) allegedly accumulated via gold sales, oil settlements in USDT, or other informal channels. However:
- These figures are not supported by on-chain observables or reported national accounts.
- Actual tracked holdings attributed to the Venezuelan state, according to institutional trackers like BitcoinTreasuries.net, are very small (e.g., ~240 BTC).
Venezuela demonstrates widespread crypto use under economic stress, but there is little evidence of meaningful adoption at the sovereign reserve level. Claims of large state Bitcoin holdings remain unsupported.
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Harriet Thompson
Bitwise
Sales Associate
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