For Russia’s President Vladimir Putin, Bitcoin mining brings competitive advantages. He said this during a video conference with members of the government.
Vladimir Putin in support of Bitcoin mining
The Russian president’s words come at a time when Russia is questioning what to do with cryptocurrencies. Not surprisingly, it was precisely with the regulation of cryptocurrencies that the president of Russia wanted to open the video conference.
First of all, he said that he is aware of the matter and clarified that it is up to the Central Bank of Russia to regulate it, but he also added:
‘[The Central Bank does not hinder our technical progress and is making the necessary efforts to introduce the latest technologies in this field of activity”.
Vladimir Putin then spoke about the advantages of mining in Russia, emphasizing two aspects:
- the high availability of electricity,
- the presence of experts in the field.
To be precise, he said:
”As far as cryptocurrencies are concerned, the Central Bank has its own position, which is related to the fact that, according to the experts of the Central Bank, the expansion of this type of activity involves risks, and primarily for the citizens of the country, given the high volatility and some other components of this topic. We obviously have some competitive advantages, especially in so-called mining. By which I mean the surplus of electricity and well-trained personnel available in the country”.
President Putin’s call is for both the government and the Russian Central Bank to come to an understanding:
“I would ask both the Russian government and the Central Bank to express a kind of unanimous opinion during the discussion, and I would ask you to hold this discussion in the near future, and then report on the results that will be reached during this discussion”.
Cryptocurrency mining in Russia
Russia has become one of the top places where Bitcoin mining is taking place. According to data from the University of Cambridge updated in August 2021, the Russian Federation holds 11.23% of the total Bitcoin hashrate. Only the United States and Kazakhstan, considered the main shores chosen by miners after China’s ban, mine more than Russia.
It is clear that President Putin does not want to lose what he calls a “competitive advantage” over the United States, the leading country in Bitcoin mining.
Russia has evolved a lot in recent years. It is enough to think that it has doubled its hashrate from 5.9% in September 2019 to 12.2% today, but it remains behind Kazakhstan which is now struggling with a serious energy crisis.
This geopolitical context also allows Russia to perhaps undermine Kazakhstan and come to be the sole adversary of the United States.
The position of the Russian Central Bank
However, the Russian Central Bank seems decidedly hostile to cryptocurrencies, especially as an investment tool. The institution has been speaking out against cryptocurrencies for some time, but its views will have to be translated into laws to be passed at the Duma.
The opposition of the Central Bank of Russia also relates to the upcoming issuance of the Digital Ruble. The launch of Russia’s CBDC is intended to be their own response to “different” digital currencies, embodying the same advantages in terms of speed and reduced commission costs. But the Digital Ruble will be centralized and have no speculative fate, unlike cryptocurrencies like Bitcoin.
In the midst of this diatribe, President Putin’s position is clear: cryptocurrencies are here to stay, and this suggests that the Central Bank will have to come to terms with it and compromise.