Recent speculation suggests that the Venezuelan regime may have a secret stash of Bitcoin potentially worth more than $60 billion. However, this claim appears to be rooted in speculation and second-hand sales, with a lack of reliable on-chain evidence linking these funds to state-controlled wallets. As a born-and-bred Venezuelan who has been mining Bitcoin domestically for years, I don’t believe the Venezuelan regime has a large secret stash of Bitcoin, and I’ll explain why.
First, let’s clear up the doubts. Claims in several articles suggest that the origins of the regime’s Bitcoin stash are:
1) Massive sale of gold exchanged for Bitcoin in 2018.
2) Oil revenues are priced in Bitcoin. and
3) Theft/confiscation of mining equipment.
I believe, and it has been reported, that Venezuela received a portion of its oil sales in virtual currency. And I know for a fact that it stole mining equipment – some of it belonged to my family. We have yet to see any reliable evidence that the 2018 gold sales were converted to Bitcoin, and given what we know about the major companies, it seems unlikely.
Why is it unlikely that $2.7 billion in gold sales dating back to 2018 were converted to Bitcoin?
The alleged mastermind behind the operation, current Minister of Industry and National Production Alex Saab, was detained in the United States from 2020 to 2023. Former President Joe Biden’s administration released him to Venezuela in December 2023 as part of a prisoner exchange. At the time of his release, swirling speculation suggested that the amount of BTC he controlled was worth an estimated $10 billion to $20 billion.
For context, the Venezuelan Central Bank’s listed reserves at the time of his release were approximately $9.9 billion, and those official reserves did not include any publicly identified disclosures of BTC. If Mr. Saab truly controlled about twice as much foreign exchange reserves as reported by Venezuela’s central bank before his release, that certainly does not match public records. Moreover, Saab had been in US custody for years and had limited ability to direct complex financial operations, not to mention that there was no reliable on-chain attribution linking a wallet of that size to him or the Venezuelan state.
Why are proceeds from the sale of virtual currencies unlikely to be reflected 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 would have prevented any meaningful value from accumulating in the regime’s treasury. There are many examples of corruption, but let’s focus specifically on SUNACRIP, the crypto regulator established by the regime. Back in March 2023, there was a scandal in which corrupt officials personally embezzled billions of dollars through irregular oil sales to state oil company PDVSA. From 2020 to 2023, these officials stole an estimated $17.6 billion. In other words, any “profits” beyond what PDVSA needed to barely survive were likely siphoned off into the pockets of corrupt members of the regime.
What happens to the proceeds from operating stolen mining equipment?
The administration has a long track record of mismanaging complex operations, even strategic ones like PDVSA. Since 1999, it has confiscated and bankrupted thousands of private companies and destroyed the crown jewel of state oil company PDVSA. From 1999 to today, the regime reduced PDVSA, a world-class oil producer producing 3.5 million barrels per day, to an anemic operation with a production capacity of only 800,000 barrels per day. Even if they stole or inherited state-of-the-art equipment, the regime would not be able to operate effectively.
Another reason is that the country is suffering from chronic energy shortages. Although Venezuela is rich in oil reserves, the country’s electricity infrastructure is in such poor condition that citizens across the country suffer from rolling blackouts for more than four hours a day, sometimes multiple times a day. The country’s electricity grid remains vulnerable due to chronic lack of investment, poor infrastructure (particularly at the Gridam hydroelectric facility, which provides approximately 70-80% of Venezuela’s electricity), loss of skilled workers to immigration, and reliance on aging systems. This leads to both unplanned outages and deliberate rationing to prevent complete collapse.
Unpredictable and unreliable energy sources pose challenges when launching large-scale mining operations in less-than-ideal conditions (remember, we’re not talking about pristine data centers here; the wear and tear on these machines is tough; I’ve seen it firsthand).
In short, I think Venezuela has Bitcoin. It’s just out of the hands of the government.
