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Venezuela’s oil company, PDVSA, is considering switching from hard cash to bitcoin and ether as payment means for its suppliers, Bloomberg reports, citing people in the know who declined to provide their names.
According to the report, Venezuela’s central bank is studying whether it can stock up on the cryptocurrencies and include them in its foreign exchange reserves. To date, according to Bloomberg, these have slumped to just $7.9 billion.
Venezuela launched its own cryptocurrency, the petro, last year, to much local fanfare. The currency was to be backed by the country’s oil and gold reserves. While many saw it as an attempt to revive a failing economy destined to fail, Venezuela’s President, Nicolas Maduro, touted it as part of an economic recovery program.
Yet the petro never took off, not least because the U.S. banned American traders from dealing in the crypto months before its official launch in November last year. Traders themselves were not particularly enthusiastic about the new crypto and it never took off the way Caracas may have expected it to.
However, as Decrypt points out, bitcoin and ether are internationally recognized and widely used cryptocurrencies, unlike the petro. Both are accepted globally and using them to pay for services is not an eccentric way of doing business anymore.
Decrypt also notes Venezuela has cheap electricity, which means the government may have already organized crypto mining farms to accumulate reserves of bitcoin and ethereum, despite the string of blackouts earlier this year, which crippled the grid and the economy.
Unfortunately for Venezuela, using cryptos instead of fiat currencies will not be problem-free. Cryptocurrencies are traded on online exchanges and many of these are subject to U.S. laws or the laws of countries that comply with U.S. laws, especially when it comes to sanction violation. In other words, switching from cash to cryptocurrencies may end up being futile for PDVSA.
By Irina Slav for Oilprice.com
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Irina is a writer for Oilprice.com with over a decade of experience writing on the oil and gas industry.