#730 – Episode 730: US Dollars, Counterfeit Money, and Bitcoin Mining in Latin America

Automatically transcribed from the original recording; names and wording may contain errors.

[00:00] South of the border down Mexico way That's where I fell in love when the stars above came out to play and now as I wonder Hello there all you expat wannabes. I'm Johnny Mueller and you're listening to the expat files living in Latin America The show that tells you just what it's like to live work play and or retire down here in Latin America It's a mix of the good the bad the ugly and the great and it's all right here. So let's get started All right, let's talk about money and the acceptance of us funny money here in Latin America Of course, everyone down here loves the US dollar like they do everything up in the states However, you only find it's pretty much universally accepted on the gringo tourist trail and in the business

[00:47] Districts where they've got first world hotels and stuff when you're off the gringo tourist trail But even then notice when you hand over a Lincoln or a Franklin They'll hold it up to the light first seemingly checking for watermarks in that little mylar strip But you know, it seems only people in banks actually know what they're looking for in that respect Though everyone else will hold it up to the light and do the same Pretending they actually know what the hell they're doing. However, what they're really looking for not so much that it's counterfeit They're looking for tears rips doodles or scratches because you see even the tiniest of smudges or pan or pencil marks Will be refused when the business owner tallies up at the end of the day and finally turns that money into his bank You've heard me say this before when you bring us dollars down to Latin America They better be absolutely perfect because locals know if they've got any kind of defect at all

[01:34] They'll get rejected and then they'll be stuck with some dollars They can't do anything with at least for the time being unless of course They live in El Salvador Panama Ecuador or beliefs where the US dollar funny money is for better or worse The local legal tender now It is true that every mom-and-pop little store will have one or more counterfeit US dollar bills Usually a 20 year of Franklin taped to the cash register a display case. They've all been gouged that way So they're mighty cautious, but here's the point. There are absolutely perfect counterfeit 120s floating around Latin America in fact all over the world I mean come on in this age of high-tech in 3d printers If you think the bad guys and no-goodniks can't reproduce what's on a piece of paper in two dimensions

[02:20] No less come on. Oh, I know I know the paper special, but they can reproduce that too And guess who's really good at reproducing that stuff. Would you believe China and North Korea? Yep was talking to a US government agency type the other day Those guys are around all right generally hanging around in gringo tourist areas. Why not? It's the place to observe gringo expats I mean come on. It's beyond belief that we'd all want to leave the good old us of a to them We're just a bunch of troublemakers on the fringe Somehow we've escaped the barnyard or off the grid somewhat and uncle Sam and his minions aren't liking that too much So yes over the years. I spotted more than a few government types embassy types in US military types The US government has a presence everywhere. They want their fingers and everything, but you knew that already by the way

[03:09] When I run into those military and agency times, so I give them great big dollops of misinformation When they ask about me hell, I'm always trying to pump them for information. Why not? They don't know it But they really are the enemy you know I mean come on Why do you think so many gringles and expats are heading south of the border because the US government has provided such a paradise For all its citizens Anyway, most these guys like to drink and when people drink they talk though I'm the exception. I don't drink but I still talk though. Like I said with dollops of Misinformation anyway, the subject got around to the US and its enemies. That would be practically everyone. We don't buy off these days, right? Anyway, he said North Korea's not going away He says they talk about the US putting pressure on China to rein in their bad little pudgy boy in North Korea

[03:56] But this guy said he knows for a fact and has been involved in Investigations of counterfeit dough and North Korea is the biggest producer of counterfeit 20s and hundred-dollar bills They're absolutely perfect. It's a huge business and money maker for them They sell them on the black market to other no-goodnecks like the Russian Mafia for 40 cents on the dollar In exchange for real funny money dollars in euros So in effect he says it doesn't matter how many sanctions you put on these guys are never gonna run out of US dollars in euros They just have to keep the presses running They can do that a mile deep down in a bunker whether bombs are flying overhead or not So he said don't fool yourself sanctions against North Korea don't mean poo He said it'd be way too risky for the Chinese to print perfect US money

[04:43] But of course, they benefit greatly too. They let the little gnome do it So why am I bringing this up? What does this have to do with living in Latin America? Well, that's one of the reasons why they check your 20s and your hundred-dollar bills So thoroughly and why occasionally when you walk into a bank or a place of business or hotel There will be a sign that says we do not take US $100 bills then again I've been in banks hotels and places of business where they have a sign saying we do not take US $20 bills so go figure however again if you're in a country like Salvador Panama Whose currency is the US dollar they'll take a rip-torn or mutilated bill just like they will up in the states In fact, I and many long-term gringos and expats have small collections of Imperfect US dollar currency always ready to tote it along when we're visiting a country like Panama that uses US funny money

[05:35] By the way, there's so many different kinds and colors of Latin American funny money I don't think an average or even above average gringo could tell counterfeit local currency from the real thing Even if done on a cheap inkjet printer on toilet paper Then again, the default use for most funny money is TP, right? By the way, if you ever get stuck holding the bag that is someone says hey That's a counterfeit peso or lump in a note you've got there. I'm not taking that thing Some local businessman who handled money a lot can tell the difference though. You never will be able to well Just know there's no use contacting the authorities. There's no FBI to call Just do what everyone else does play hot potato and pass it on to the next guy because technically, you know It's all a scam whether it's printed by the government or printed in somebody's basement. Neither are worth the paper

[06:26] They're printed on they're backed by nothing. All right, so changing gears a bit was talking to an expat gringo The other day he's been down here three or four years and he said Johnny I just experienced a little calamity at the place. I've been renting. I think your listeners. I don't know about this All right So listen up because this will probably happen to you just a little background first This guy is living in the Central American Altiplano region around 6,000 feet above sea level He's only about two and a half hours from the Atlantic or Pacific side and all of us eventually Want to have a little vacation at the beach, you know Including him little change of scenery and all that because you know Even when you're in eternal spring like weather it can get monotonous

[07:12] You know too much of a good thing and all that So anyway, he closed up his two-story condo and went to the beach Came back a week later on a Sunday. It was very quiet in the house He sat down on the living room sofa and heard the unmistakable sound of running water. He was thinking. Oh No water damage and so he checked all around the house No water damage, but his upstairs toilet had been running for a week and when he got his water bill Which was normally around 15 bucks a month this time 85 bucks. Alright, so here's what you have to know along with the relevant tips for gringos and expats You see one of the big problems you'll find when you're living down here in Latin America and renting is that they put cheap plumbing Fixtures, you know faucets drains and stuff even in so-called expensive housing and high-end subdivisions

[08:02] Now that's not to say they always cheap out But for example, you can go into a very nicely appointed first-world style condo They'll have luxury items like Spanish tile real marble or granite countertops Even perhaps an American standard or Kohler's sink in the kitchen, you know, that's high-end stuff However, the faucets and the fixtures on that Kohler's sink could be some cheap ass low-cost garbage made in Mexico or Costa Rica You might find faucets like that throughout the house or maybe just in certain areas like the guest room or the so-called Cuerto de Servicio, that would be the maids quarters So that's true if you're renting or buying an existing house, of course, if you're building a house You'll get a chance to pick out your own fixtures. That's usually how it works, right? By the way, don't skip that step and let your builder or architect pick them up or you'll be sorry

[08:53] However, when it comes to renting or purchasing an existing home just never assume if you got some high-end fixtures in the kitchen or the master bedroom that they used high-quality fixtures to the Rest of the house and the worst offenders the flapper and the inside Mechanism the guts of the toilet tanks in your house For example, I once built a house and went through various hardware stores to pick out gringo sized toilets Now don't laugh ten years ago or so it was very difficult, especially off the gringo tourist trail to go to a hardware store or plumbing fixture store and Find your regular Kohler or American Standard toilets in the color or colors you want sized for well gringo, but Instead you'd see all kinds of toilets and sinks sized for little people

[09:43] In fact, I guarantee you if you come down here and bond with the Latin people and visit their houses get invited to parties and such You'll be shocked to see that probably 80% of the toilets and sinks are what you might first think as kitty or midget sized Now admittedly most Americans are much bigger than Latin's in both vertical and horizontal dimensions You'll notice those things right away, especially if you're on the tall side I'm six foot and I've whacked my head on many a door jam and since I'm here in Latin America No one to sue how about that? Oh And you really have to keep your eyes peeled for how Latins make stairs and staircases now with us building codes when you make stairs There's a seven inch rise and an 11 inch run the run being the flat part of the stair or your foot lands

[10:29] However here in Latin America, no one's watching or inspecting so those numbers could be all over the place and believe me they are Which means since we've been programmed all our lives for a certain uniform stair height and width Our bodies have a deeply ingrained intrinsic memory of how to take stairs We can do it in the dark do it in our sleep That means when there's a non-standard height like you'll find all over the place here You'll stumble trip and fall Which means you will learn in a hurry to look down and take the stairs slowly The big problem is so a lot of staircases are terribly lit or not lit at all So at night you really have to be on guard but back to our gringo whose toilet ran Continuously for a week my suggestion unless you buy a first-world brand like American Standard or Kohler

[11:14] They always have high quality flush and fill mechanisms One of the first things I recommend that you do when you move into a house apartment condo Whatever is to go down to a big local hardware store plumbing house and buy an all-new replacement parts Package for each of your toilet tanks do buy a high-end brand one that was made in the States Well take that back. Nothing's made in the States It's designed in the States and made in Mexico or China But you know the drill and you know what that only sets you back around ten bucks a toilet So you got three toilets thirty bucks But let me tell you spending thirty bucks will save you a hell of a lot of grief in the future Because even if you find a nice stylish Latin brand toilet Like I found and outfitted in a previous house of mine very nice stuff made in Brazil

[12:02] American size fantastic porcelain craftsmanship, but the tank mechanisms pure junk But it took six months or so to realize that oh, that's not to say they weren't tested at the factory Yep, they'll work a while couple months anyway Maybe more if it's never used like for example in a guest room or a maids quarters And you don't have a living maid, but let me tell you spending 30 bucks and replacing that stuff is very good insurance By the way the same expat gringo who had the toilet problem told me that in a previous condo that he'd rented one afternoon He was taking a nap on his sofa, and he had this he had a dream that he'd wet his pants Turns out the people in the condo above him had a water leak And it was seeping through his ceiling and dripping on his pants so in the end

[12:51] He said luckily his plumbing was okay, but the buildings wasn't Yet another reason it's a very stupid idea to build with plasterboard you know gypsum board otherwise known as drywall Yeah, I know it's used everywhere in the states It's cheap and dirty and in the last five years It's made its appearance here in Latin America in a big way too again because it's cheap and dirty and fast to put up a lot Cheaper by the way then cement block and mortar however It's pretty much a guarantee that everyone who uses that stuff finds out in the end is a sponge for water and humidity Again, it's a very bad move to use that stuff. You will regret it believe me In fact is the only place in Latin America where I've seen they've been able to get away with it is in malls and commercial centers Where businesses come and go and inside walls are being changed all the time in other words lots of drywall turnover

[13:40] Oh, and by the way forgot to mention drywalls easily damaged Especially by careless cleaning ladies maintenance guys and delivery guys You'll find out they're forever banging into walls and because most walls are black concrete and mortar It'll just be the paint that's scratched Unless it's drywall by the way of the worst place to use drywall beach houses, man You got troubles if you got drywall near the beach, but you knew that already, right? And now a very special report, you know We've all been reading all over the place about these so-called crypto and Bitcoin miners, right? Well, do you know where the number one cryptocurrency mining place in the world is? China that figures number two take a guess and you'd be wrong

[14:27] It's Venezuela say what which is why you just have to hear parts of this article Describing well what none of us ever knew before this stuff has been kept way under wraps Because when someone opens their mouth about it, they either go to jail or disappear or worse All right So Venezuela is a number two crypto mining country in the world yet Bitcoin in crypto except for the government crypto, which they're trying to create now is illegal Hmm and all outside analysts are betting the Venezuelan government crypto called the petro will be a complete disaster You know everything governments touch turns to poop, right? The thing is Bitcoin miners there are upper middle class Venezuelans who want to maintain their status

[15:14] You remember what I said about the definition of upper middle class here in Latin America That would be pretty much a solid middle class up in the States So it is true not every private citizen in Venezuela spends his whole day in food lines the so-called upper middle class and wealthy Venezuelanos are mining Bitcoin to make ends meet So right now what I've got for you is something very rare a Bitcoin miner in Venezuela doing an interview He calls himself. Mr. X very revealing stuff here in a lot of ways as usual I'll paraphrase a bit and cut out the boring bits. Mr. X like so many thousands of Bitcoin miners is based in Caracas the capital of Venezuela and here's the first question. Why do you have to remain anonymous to do this interview?

[16:00] Mr. X says because mining isn't regulated yet It's on the fringe of illegality and many miners in Venezuela have gotten in big trouble Next question. Give us your real-life perspective on what Bitcoin mining in Venezuela means to you He says right now it means everything because it's one of the only ways to defeat the economic catastrophe we're facing Because by bypassing the currency exchange controls my whole attention and thousands of others are on this business He says with the proceeds of mining you get to feed your family and be able to save even some money for the future Among other benefits that come with a surplus balance We're the only ones that have a surplus balance here in Venezuela, then he's asked this question

[16:46] What do people do with the Bitcoin after they've mined it? He says if you need local cash Boulevard right away, then you end up selling some Bitcoin at a site called local bitcoins calm That's the deal with your day-to-day living expenses If you don't need the money right away, then you store it mainly on Coinbase and other crypto exchanges Cold storage like treasures and Nanos are not in our culture yet and very difficult to get which means everything's online At least for now then he's asked. How do you exchange the Bitcoin and what do you exchange it for? He says you need to find an exchange that will change Bitcoin to boulevards or dollars because no Establishments in Venezuela take Bitcoin directly. That would be illegal

[17:32] However, if you're buying more mining gear to increase your Bitcoin output You'll have to exchange Bitcoin for Bitcoin cash at a place called bit mains Then he's asked where do most people store their Bitcoin in Venezuela? He said unfortunately, they don't have hardware wallets yet So the most popular wallet around is still coinbase Sadly, I always tell people to get a cold storage device such as a nano ledger or Trezor Even though that's not the culture and they're pretty much unavailable because people don't know how to use them yet Then he says people love the service uphold calm because it lets them convert their Bitcoin to US dollars Which can then be directly converted into boxes even bags full of boulevards

[18:19] Then comes the question how many people are miners in Venezuela? What's your guess? Answer it usually only happens in the medium to high-class range given that the people in poverty can't afford the equipment I'd say between upper-middle class and wealthy people about one in five of them are involved in some way or another in mining However, you should note that some Venezuelans are running to set up very big mining farms in the US ones that have visas and can fly Out given they won't face any extortion up there like we do if we're caught However, the big advantage here is that our electricity is practically free. So I'd say here in Venezuela It's hard to believe but there are literally thousands I'd say even over a hundred thousand people mining Bitcoin and as far as the mining equipment the hardware

[19:05] That's an interesting thing. It seems like the whole equipment supply chain from manufacturer to buyer just appeared out of nowhere There was a demand and came the supply nearly all of it by the way coming out of China That's partly because some people decided not to mine But they figured it was more profitable to buy and sell the equipment to us There is enough mining equipment around so that friends who teach other friends how to mine can get some easily The mystery is that the government is not supposed to let that kind of equipment in this was to monitor the import of all equipment Then he says I just don't get how the equipment gets here I understand if it comes directly from China in marked containers It gets seized by the government Which is why rumor has it when the equipment arrives at the Panama Canal

[19:54] He gets transferred to another container with a different bill of lading without Chinese markings And as far as the black market for Bitcoin mining equipment You don't talk about it with anyone unless you absolutely have their confidence You only talk about it with the people you trust You can join the market pretty fast though If you want to the question always is how do people learn to mine Bitcoin and how are they able to set Themselves up to make money once they have the equipment It turns out there's always a smart guy someone smart enough to learn how to connect the equipment and most of the time he ends Up being the go-to guy the guy There was one particular guy who did my complete setup and trained me for a fee Of course the thing is you don't want strangers in your mining facility or in your house because anything could lead you to the extortion

[20:42] Party even the guy who sets you up with the cooling system For example could betray you later that night when drinking with his buddies Doesn't take long for the word to get out. So you have to keep your mouth shut You probably heard the saying the only way three people can keep a secret is if you kill two of them The word on the street is that basically any physical empty space with an electric service is now hosting a Bitcoin mining rig or two or ten and he says they're making Ridiculous amounts of money and the big farms even crazier because of the amazingly cheap electricity prices Funny thing the government actually subsidizes us Bitcoin miners. How is that for unintended secondary effects? Then he says let me describe what makes this so cost effective now so you can understand it if you pay

[21:33] Let's say ten cents per kilowatt hour up in the United States That means if you use a thousand kilowatt hours per month Which is probably what an average US family of four would use in the states That would cost a hundred dollars a month whereas that same thousand kilowatt hours per month here in Venezuela Cost us less than two US cents or point zero zero zero zero One two five dollars per kilowatt hour and that's why in terms of food if you're a Bitcoin miner You'll actually gain weight as opposed to the rest of the population in terms of necessities You could afford almost anything you need to live according to your own life status Insurance food tuition utilities and almost any regular expenses become affordable

[22:19] Then he says the real goal of the Venezuela government is not to shut down miners But to find out who's mining and how much we're making so they can tax us or confiscate our hardware and make gusts work for them So what are the consequences for getting caught as a crypto miner? Number one extortion by gangs and the cops two beatings and number three Detention in jail if you don't cooperate with the police who are often the extortionists and thieves themselves and it's true Some people gain favors by telling the government on you and they'll come and confiscate your equipment And there's absolutely nothing you can do about it Oh, and by the way, he says did you know there's a spanish language bitcoin and crypto? Online magazine it's called crypto noticias. It's kind of a latino bitcoin blogger's bible. We're well organized, you know

[23:09] Unfortunately, i've heard multiple stories of how people get their mining operation rated and during the raid The government takes it and has you install it for them Then they hire you as an infiltrator and make you rat out other miners and installers Meanwhile, they continue to make bitcoin from your mining equipment that you're forced to maintain In fact, he said the venezuelan government has set up an intelligence police division exclusively to find miners And the two ways they find us are people ratting us out And by monitoring electric power usage in neighborhoods looking for hot spots and irregularities The way it works when police find a mining operation They count the number of machines you have and the extortion rate is a thousand dollars per machine Depending more or less on the bitcoin valuation of the moment

[23:58] Then he says I have it on good authority that in the capital caracas in the military complex a huge campus By the way, it's just loaded with mining hardware and equipment including ant mining equipment So he says the downsides of course are getting busted and how that's going to affect your life But the other downside is that venezuela has one of the slowest internet speeds on the planet Top of that it's spotty and not really stable at all Then he says of course every miner uses an ip changer like for example, hide my ass ip changer That way there's no way to track you on the internet You just change your ip address to another country say netherlands and that's where it appears all the activity is happening Not in venezuela then he says he's been mining himself for about two years. The question comes. How did he learn it?

[24:48] To which he says the same way you learn to do anything in this lifetime google and youtube He says if you can't find it on youtube, it's just not out there Then he says the obvious question is what kind of hardware do I run? What kind of equipment? He says I only personally do bitcoin mining. I don't care about the other cryptos For me a couple of s9 boards are enough He says really you only need one or two s9 boards and that's enough for you and your family to live nicely You don't need a giant mining operation farm full of equipment Then he says if you're interested in learning about the equipment and what we're using yourself Just go to bitcoin talk.org or bitmain.com Those are our two main resources. He says then he says as for me and my two boards i've got around

[25:33] 7 000 us dollars invested probably four times as much as I would have needed to spend had I lived in a country where the stuff Wasn't outlawed average. Venezuelans could never afford the initial investment However, if you can afford the hardware you'll find electric power is cheaper than water If I told you how much my electric bill was even with my crypto mining outfits You wouldn't believe me And he says the real key to all this is to be able to change your bitcoins into dollars or the local bolivar money And we do that using a site called local bitcoins.com It's a lifesaver because there you can exchange your bitcoins for the local currency Then he offers some tips for people thinking about getting into mining in venezuela And he says the golden rule is to stay undercover and evade detection and to do that

[26:21] You'll never want to have more than two workers per location Which brings up the question if some miners are making all that money in dollars and switching it over to mega boulevards Aren't they living like royalty and don't they get spotted out for that? And to that he says yeah, there are many many miners here who are very wealthy now Their wealth is absolutely huge in terms of bolivars meaning in no time They became high class citizens able to afford practically anything and the key not to be stupid about it Don't squander it on the streets. Don't be a show-off or bad things will happen to you In fact, he says almost everyone in venezuela middle class and up are talking about bitcoin It shows up in practically every conversation Even military officers are using coinbase to buy in with fiat and store their own bitcoins there

[27:11] It's the only way we have besides buying something like gold to beat our terrible monetary inflation And strangely enough even though our boulevard is practically worthless against every other currency There are a few local bitcoin exchanges like local bitcoins.com where you can actually buy bitcoin other cryptos with boulevards south of the border This is the expat files living in latin america if you want me to help you out with your own plan b Just schedule a one-on-one consult send me an email the expat files at gmail.com And if you want to learn how to move forward with your own plan b from right up there in the states go to www.expatplanb.com and check out my three videos. See ya nos vemos