Crypto Newcomers' Gold Rush: Coinbase's Co-creation Adventure in Venezuelan Oil Fields

Author: Zen, PANews

After making enough money in the crypto industry, where should the next investment go? Coinbase co-founder Fred Ehrsam recently gave a surprising answer: oil fields. This 38-year-old crypto billionaire has been frequently seen in Caracas, the capital of Venezuela, over the past few months, and has even stayed in local hotels for extended periods.

After months of travel, in early September, Fred Ehrsam finally reaped his first "harvest." Primavera Infinita, which he co-founded, officially signed a production participation contract with Venezuela's state-owned oil company PDVSA, gaining the opportunity to develop the Buare-Elotes block oil field. PDVSA's long-term goal is for the block to contribute more than 70,000 barrels per day of new production.

This is also an investment that is hard to reconcile with Ehrsam's resume.

He previously worked as a forex trader at Goldman Sachs, co-founded Coinbase with Brian Armstrong in 2012, and co-founded the crypto investment firm Paradigm in 2018. His investment portfolio later expanded to include cutting-edge technology companies such as OpenAI, Anthropic, and SpaceX. Why would someone who has accumulated wealth through digital assets and invested in software and cutting-edge technology for the long term choose to venture into politically risky Venezuela to compete for a traditional resource that humans have been exploiting for over a century? Perhaps the answer lies not only in oil. While established oil giants hesitated, Ehrsam rushed in. Looking solely at its oil resources, Venezuela is a place that cannot be ignored. However, over the past two decades, the country's vast underground resources have not translated into commensurate production. In the late 1990s, Venezuela's daily crude oil production once reached approximately 3 million barrels; today, it is only 1.25 million barrels per day. Long-term sanctions, insufficient investment, aging equipment, coupled with political and property rights risks, have gradually made Venezuela, a country possessing one of the world's largest proven oil reserves, a unique entity in the global oil industry. The oil reserves are not lacking; what is truly lacking is sustained capital investment, well-maintained infrastructure, and a continuous loss of technical talent and operational capabilities. However, starting in 2026, the situation changed. After Maduro's arrest by the US and Delcy Rodríguez's appointment as interim president, relations between the US and Venezuela were rapidly restructured. Specifically in the oil industry, Venezuela reformed its oil laws, allowing more private capital to participate in production under new models; the Trump administration placed oil at the core of its Venezuelan strategy, pushing for sanctions and contract framework adjustments while urging US energy companies to invest approximately $100 billion locally. This has made Venezuela's oil industry a market undergoing a repricing process. A country long avoided by global capital due to years of sanctions and economic crisis could potentially offer returns far exceeding those of mature markets once it reopens. Judging from his subsequent choices, Ehrsam is clearly willing to take the risk for this potential return. He co-founded Primavera earlier this year with Manuel Iribarren, a Venezuelan graduate of Stanford. In February, the two arrived in Venezuela to seek investment opportunities. After meetings with Venezuelan leaders and PdVSA executives, they were most interested in high-risk investments like oil and gas. This is actually a familiar odds structure for VCs, and what attracted Ehrsam the most. It's not about finding a 10% undervaluation in a stable, transparent market, but rather about accepting a huge probability of failure in a place where many investors dare not enter, in exchange for significant asset revaluation potential after institutional changes. However, this potentially high-return water is extremely deep, and not everyone is willing to wade in. In fact, Trump had urged companies like ExxonMobil, ConocoPhillips, and Continental Resources (owned by oil tycoon Harold Hamm) to invest $100 billion, but these established energy giants remained hesitant. ExxonMobil and ConocoPhillips, which had deep roots in Venezuela, experienced the nationalization of assets during the Chavez era. This legacy of claims makes them more sensitive to issues such as property rights, arbitration, and whether the next government will continue to recognize current contracts. Of course, not all oil giants are so hesitant. Chevron, which has operated in Venezuela for decades, announced in early September that it would invest $7 billion in Venezuelan oil fields over the next five years, hoping to increase its production in Venezuela to approximately 600,000 barrels per day. Sources familiar with the matter revealed that the terms of the new joint venture contract between Chevron and PdVSA are expected to be very favorable, which is believed to reduce the risk of further investment in the country.

“Disorderly land grabbing benefits no one”

In this round of Venezuelan oil liberalization, in addition to established energy companies like Chevron, a number of smaller, riskier independent oil and gas companies and new capital have also emerged. They come from diverse backgrounds, but share a striking commonality—various degrees of connection with Trump and his political network.

Ehrsam rarely mentions his political views publicly, but according to federal fundraising records, he donated $1 million to the Trump-Vance Inauguration Committee, establishing connections with the Trump administration and currently serving on the President's Council of Advisors on Science and Technology. For an oil project highly dependent on US sanctions policies, Venezuelan domestic law, and the direction of bilateral relations, this political access is itself a valuable resource.

It can significantly reduce information asymmetry and change investors' assessment of the risk of policy reversal. Similar connections have also emerged with other new entrants. Denver-based Aspect Holdings has signed a contract with Venezuela's state-owned oil company, PdVSA, to participate in local technology research. Aspect is a private energy investment and exploration firm founded by billionaire Alex Cranberg, a long-time major Republican donor. Another company attempting to enter the Venezuelan market, Sable Offshore, is led by oil industry veteran Jim Flores. Sable has a more traditional energy industry background, but it also has noteworthy policy overlaps with the Trump administration. Previously, when California regulators opposed its resumption of offshore oil production in Santa Barbara, Sable ultimately secured federal support through an executive order signed by Trump, allowing the project to proceed. A more typical example is Dallas-based Hunt Oil. On August 18, the company signed a production participation contract with Venezuela to participate in the development and production increase of the Caro and Carisito oil and gas fields in the east. Hunt Oil is not a new player in the oil industry, but an independent energy company with decades of experience in oil and gas development. The Hunt family behind it is a long-time supporter of Trump and the Republican Party. However, rather than saying the Trump administration is "allocating" Venezuelan oil fields, it's more accurate to say that these American capital firms are more willing to believe the current policy window will continue and are more willing to bear the resulting tail risks. Conversely, for established giants like ExxonMobil and ConocoPhillips, their continued hesitation is not due to unfamiliarity with Venezuela, but rather because they are too familiar with it. Precisely because they have experienced the nationalization of assets, lengthy arbitrations, and repeated sanctions, they are more cautious about the stability of property rights and the continuity of policies. This contrast has also raised concerns within Venezuela's oil industry. Some veterans question whether these new entrants possess sufficient capital and expertise to handle Venezuela's complex heavy oil projects. Local crude oil has high viscosity, infrastructure is aging, and development and transportation require continuous investment; moreover, Venezuela's massive debt may make banks cautious about project financing, ultimately forcing many investments to rely more heavily on equity investors. Pedro Burelli, a Venezuelan opposition figure and former director of PdVSA, believes that oil fields should be handed over to companies with sufficient capital and experience in complex projects, rather than being rapidly divided up after the policy window opens. Burelli stated that the current disorderly land grab benefits no one. Betting on the Open Political Window The question arises: what should an investor like Fred Ehrsam, who has never been involved in the oil industry and is now venturing into the most complex Venezuelan market, do? The most familiar approach in venture capital is to first find undervalued assets or entrepreneurs, and then solve subsequent problems by recruiting a management team, raising additional funding, and integrating resources. Ehrsam is clearly trying to replicate this approach. Lacking experience in the oil and gas industry, he has brought in a professional team including seasoned oil expert Dheeraj Verma. However, the difference between oil fields and software companies is not simply a matter of "asset-heavy" versus "asset-light." What truly differentiates them is the method of capital investment and the payback period. For a software company, once funds are received, they can be quickly converted into team expansion and market growth. If growth falls short of expectations, losses can be mitigated through layoffs, reduced investment, product adjustments, or even business transformation. While many costs are also significant, new investments are often easier to phase out, reduce, or reallocate. The logic in the oil industry is entirely different. Whether it's well repair, pipeline construction, equipment upgrades, or improvements to storage and transportation systems, substantial upfront capital investment is required before production is realized. Moreover, a significant portion of these investments is highly irreversible; a project's profitability depends on its ability to continue production, exports, and settlements over the next few years, ultimately recouping the initial investment. For Ehrsam and his Primavera, the biggest risk may not stem from oil technology itself, but rather from the mismatch between the payback period and the political cycle. Oilfield projects may take years to reach a stable return, but US sanctions against Venezuela, local oil laws, the contract enforcement environment, and bilateral relations could all change during this period. It's worth noting that Chevron's investment even includes international arbitration rights in the new terms. This precisely illustrates that what established oil companies are truly concerned about is whether the contracts will still be valid five or ten years after investing billions of dollars. Because whether a contract signed today will be executed under the same conditions five years from now is something no one can guarantee. This is also why other traditional oil giants are particularly cautious about Venezuela. From this perspective, Ehrsam's real bet isn't just on how much more production the Budare-Elotes block can generate, but on how long this current political window will remain open. The new money of the digital age is ultimately returning to the most traditional assets. Leaving aside Ehrsam's bet on the Venezuelan political climate, investing in the traditional energy sector is a phenomenon worth observing in the cryptocurrency industry. If we only look at Primavera, this can still be understood as a personal adventure by a crypto billionaire. But by broadening our perspective beyond Ehrsam, we find that similar asset preferences are not entirely isolated. In February of this year, BitMEX co-founder Arthur Hayes unusually publicly disclosed his asset allocation. In addition to cryptocurrencies such as BTC, ETH, ZEC, and HYPE, his stock portfolio covers gold, silver, copper, and uranium miners, major oil companies, Latin American energy companies, and defense companies, while also directly holding physical gold. This asset allocation has revealed a significant shift: for someone accumulating wealth through cryptocurrencies, Bitcoin is not an exclusive asset compared to gold, copper, uranium, and oil; rather, they appear together on the same balance sheet. Tether, with annual profits in the tens of billions of dollars, has gone even further in this regard. In 2025, the USDT issuer's net profit exceeded $10 billion. By the end of that year, the company stated that its independent investment portfolio, built using its profits and excess capital, exceeded $20 billion, covering multiple industries including AI, energy, precious metals, agriculture, land, and communications. One of Tether's most notable investments also occurred in South America. In 2024, Tether first acquired approximately 9.8% of the agricultural group Adecoagro for $100 million; in 2025, it launched a cash tender offer, ultimately increasing its stake to 70%. The latter offer alone involved 49.597 million shares at $12.41 per share, corresponding to approximately $615 million in cash expenditure. Tether's acquisition of a controlling stake in Adecoagro wasn't about putting it on-chain and packaging it as an RWA agricultural project; rather, it involved a traditional company that genuinely owns land, farms, processing plants, and power generation facilities. Adecoagro manages over 200,000 hectares of sugarcane plantations in Brazil, owns three sugar mills producing sugar, ethanol, and electricity; and also operates rice and dairy businesses in Argentina and Uruguay. Its sugar mills can utilize sugarcane waste for combined heat and power (CHP), selling surplus electricity to the local grid after meeting its own energy needs. This even creates a rather interesting inversion. For the past few years, the crypto industry has been talking about "real-world assets," exploring how to bring real-world assets onto the blockchain. Tether's transaction, however, followed a different path. Instead of first packaging agricultural assets into tokens, it directly acquired control of an agricultural and energy production company. From this perspective, Hayes, Tether, and Ehrsam actually represent three different paths: gaining exposure to resource prices through stocks, directly acquiring control of physical production companies, and directly participating in oil field operations. These are not strictly progressive, but they collectively illustrate that crypto capital's interest in real-world assets has moved beyond simply "how to put assets on-chain" and is beginning to manifest in more traditional holding and operating methods. In fact, the flow of funds to energy, metals, and land is not entirely accidental. These assets possess a scarcity entirely different from crypto assets. Bitcoin's 21 million-coin cap is written in the code, while the supply constraints of oil fields, mines, and land are written in geology, geography, and long development cycles. The former is a man-made but highly reliable digital scarcity, while the latter is a physical scarcity that is difficult to change in the short term through capital and technology. Fred Ehrsam's Venezuelan adventure is just one of the most extreme examples. Starting with a wealth system almost entirely composed of code and networks, he ultimately staked his hard-earned money in oil fields that required years of investment, were impossible to move, and whose fate was simultaneously determined by geology and politics. Crypto can create and transfer wealth very quickly, but when a portion of that wealth begins to seek a longer-term, larger-scale destination, it ultimately seeks its final anchor in physical entities whose networks cannot be disconnected.