Russia wants to allow friendly states to use bitcoin as a means of payment. As a result, Russia could significantly increase Bitcoin mining in its own country, making the country more and more a crypto state.
Russia’s President Vladimir Putin has so far been less fond of cryptocurrencies. Since the beginning of the year, however, he has been much more interested in Bitcoin & Co. The background may be the damage to the US dollar, but on the other hand the economic sanctions from the Ukraine war certainly play a role in why Putin is now thinking more about digital currencies and wants to strengthen them as a decentralized alternative.
Already on March 24, the head of the Russian Energy Committee Pavel Zavalny announced that Bitcoin can be used as a means of payment for gas. However, this should only be possible for allied states. “We have long been proposing that China settle rubles and yuan in local currencies. With Turkey, it will be lira and ruble. The currencies can be different, this is a common practice. You can also trade Bitcoins,” the BBC quoted Zavalny as saying. The problem, however, is that trading in cryptocurrencies is banned in both China and Turkey.
Russia’s goal with this measure could be to further weaken the hard currencies US dollar and euro. The Kremlin apparently intends to quickly integrate digital currencies into Russian payments. David Broadstock, an analyst at the Energy Studies Institute in Singapore, commented on the intention to accept Bitcoin as a means of payment. He considers this step a risk. He says, “Accepting bitcoin as payment will introduce significantly more risk into natural gas trading compared to traditional currencies.”
The data service provider “Chainanalysis” has not found any solid evidence that Russia wants to circumvent economic sanctions with cryptocurrencies. Still, there is much to suggest that Russia has increased its crypto exposure since the war began. According to information from “BTC Echo”, the market capitalization of so-called “privacy coins” has increased. These are digital coins where the identity of the owner cannot be verified. Specifically, these are cryptocurrencies such as Monero, Cash and Mina. However, this is by no means enough to cover Russia’s crypto activities.
So far, the increase in crypto payments has been mainly driven by small investors who want to protect themselves against the fall in the ruble. But “BTC Echo” also confirmed asset shifts of $62 million in large crypto investors, so-called “Whales”.