Bolivia’s YPFB plans to use cryptocurrency for energy imports due to a dollar shortage and a fuel crisis. This strategy echoes Venezuela’s past attempt with the petro cryptocurrency, which ultimately failed due to trust issues and corruption. Both countries illustrate the challenges of implementing crypto in energy payments.
Bolivia’s state energy company, YPFB, has announced its intention to utilize cryptocurrency for energy import payments amid a significant dollar shortage. This financial strain coincides with a fuel crisis triggered by dwindling natural gas exports, resulting in widespread protests across the nation. A spokesperson for YPFB revealed, “From now on, these (cryptocurrency) transactions will be carried out,” signalling a shift in their financial strategy.
Historically, Bolivia is not alone in adopting cryptocurrency for energy payments; Venezuela previously attempted a similar strategy. Six years ago, President Maduro introduced the petro cryptocurrency as part of the PdVSA-Crypto scheme, aiming to generate revenue in face of severe economic sanctions imposed by the United States. Maduro claimed that the petro would “allow new forms of international financing” and proposed the issuance of 100 million petro tokens, which he valued at approximately $6 billion.
The petro was meant to be supported by Venezuela’s substantial oil reserves, but it was deemed illegal by the Venezuelan parliament, which viewed it as an attempt to mortgage the country’s oil resources. Despite the promise of backing, the petro’s failure stemmed from a lack of trust in Maduro’s government to actually maintain the required reserves. Its collapse came in January 2024 when liquidity issues and scandals led to a complete liquidation of all holdings.
Management of the petro faced issues, particularly when state-owned PDVSA sold crude oil worth around $20 billion in cryptocurrencies and other currencies without reporting the funds to the national treasury. This lack of accountability led to serious repercussions, including the arrest of former high-ranking officials involved in the crypto dealings and PDVSA’s shift into a restructuring phase. Additionally, Venezuela’s National Power Ministry recently seized over 17,000 mining machines to reduce power consumption amid ongoing blackouts, forcing many miners to cease operations.
The contrasting experiences of Bolivia and Venezuela highlight the complexities and challenges faced in employing cryptocurrency for energy transactions, particularly regarding trust and regulatory frameworks.
In summary, Bolivia’s move to utilize cryptocurrency for energy imports reflects a pressing response to dollar shortages and the exacerbating fuel crisis. This initiative draws parallels to Venezuela’s earlier attempts with the petro cryptocurrency, which ultimately failed due to mismanagement and trust issues. The experiences of both nations underline the inherent complexities and risks associated with integrating cryptocurrency into national economic strategies, particularly in the energy sector.
Original Source: oilprice.com
