Venezuela - Chinese WhatsMiner is building a Bitcoin logistics hub in Aragua State
Aragua is also home to one of the country’s largest Bitcoin mining facilities.
Some interesting news broke on 20 July about MicroBT, the parent company of WhatsMiner, setting up a partnership with a Venezuelan firm.
WhatsMiner’s partnership with a local firm in Venezuela appears to be part of a broader plan to build a Bitcoin logistics hub in the Americas and service foreign miners who set up mining facilities in Venezuela following the China mining ban that went into effect last year.
WhatsMiner’s local partner is Criptominer C.A. José Parra is the CEO of Criptominer C.A., a company based in Aragua state that performs Bitcoin mining equipment maintenance. The company was started in 2017. Parra described the role of his company in Venezuela’s mining sector on this podcast and their links to the Maduro government and to China. It appears that Parra has strong, cooperative relationships with Venezuelan crypto regulator SUNACRIP, state electricity company CORPOELEC, and port officials (who facilitate imports of machinery from China).
Parra claims that there are multiple foreign miners in the country that are mainly interested in the southern part of the country, where PdVSA oil sites flare natural gas. There has been an influx of miners into Venezuela ever since the May 2021 China ban. A Financial Times investigation found that Venezuela absorbed 7,000 rigs post-ban. So that means that most of Venezuela’s foreign miners probably moved there in the past 12-14 months.
But interestingly, there was a separate 26 June report that describes Coincoin C.A. as one of the major mining farms in Venezuela with 10,000 m2 of space in an industrial park located in the Aragua capital city Maracay. That means that Coincoin C.A. could be a joint venture mining farm involving multiple foreign miners who shipped their machinery there after the China ban.
The neighborhood where Coincoin C.A.’s mining facilities operate is San Vicente, home to the Tren de Aragua organized crime group. That does not mean that Coincoin C.A. is guilty of organized crime. But it’s important to understand the risks of trying to do legitimate business in a place where Tren de Aragua has significant power.
Venezuela is still a very opaque place for doing business, and there is still a lot that’s unclear about all of this. That said, there are some observations to make here.
First, cowboy capitalism is alive and well in Venezuela. Foreign, private capital is finding its way around US sanctions and financing large-scale Bitcoin mining. It’s likely that this isn’t a command economy led by Maduro’s government, but rather a smattering of interests operating in a vacuum of authority. While miners might engage with central crypto authorities in Caracas at SUNACRIP, it’s probable that there are local actors who are far more important for managing the large volumes of electricity consumption miners need and the upgrades to critical infrastructure so that mining facilities can operate.
Second, WhatsMiner seems to want to build a logistics hub in Aragua using Parra’s operations and know-how. Parra has signed a 1-year contract with WhatsMiner. If successful, Parra says that WhatsMiner will base their Latin American expansion from this logistics hub. Parra’s facilities will likely serve as an inventory and repair depot for miners employing WhatsMiner machinery in other parts of Latin America. It is hard to imagine that Coincoin C.A. is operating totally independently of WhatsMiner and Parra. An operation of that size would likely need regular servicing and repair.
Foreign miners who left China after the ban are not just interested in Venezuela’s low-cost natural resources for producing electricity. The entire region is abundant with low-cost renewable energy. If Parra is right, the giant facility at Maracay could be just the beginning of a Bitcoin resource race that will sweep Latin America.