Russia seeks hope in cryptocurrencies

After being hit hard by the war and the sanctions it caused, Russia is trying to revive its economy through cryptocurrencies.

Russia may open its doors to mining Bitcoin and other PoW cryptocurrencies

As reported in a recent article, the Russian Federation’s Deputy Energy Minister Evgeny Grabchak told Tass that his country urgently needs to create an ecosystem that is conducive to the crypto world in general.

As also reported by the Russian news agency, it would be much more efficient to free up energy supplies to mining farms at a regional level rather than at a federal level, which is why there is a need for regulation that follows regional development plans. 

In detail, what we are talking about is a regulatory framework that would legalize and incentivize cryptocurrency mining in Russia. The need for this arises mainly from the financial situation that is currently weighing on the country’s economy, due to the huge budgets dedicated to the war effort and the sanctions imposed by the states allied with Ukraine. 

Cryptocurrencies as a lifeline

The pressures of war are being felt and Russia is looking for quick answers and solutions. This is somewhat inconsistent, given that a few months ago the Russian Central Bank suggested a complete ban on cryptocurrency mining and trading.  

However, considering the evolution of history, the country has found itself forced to take a step backwards. 

In fact, one of the main objectives is to remedy the collapse of the traditional financial system, largely due to the strong devaluation of the ruble, a currency that has never had overwhelming bargaining power in the world and that has always had to support an economy dependent on the dollar.

Among other things, the country immediately thought of leveraging its greatest strengths: the huge export of raw materials that are fundamental to the global industry. It is enough to think that 40% of the gas used by the European Union is imported from Russia. 

However, Russian President Vladimir Putin had tried to insist that countries not allied with his “enterprise”, such as the United Kingdom, the United States and Europe, should continue to pay for gas and oil exports in local currency. The intention was quite clear: to regain some of the valuation of the ruble, which has lost more than 20% of its market value since the beginning of the year.

In recent days, however, there has been talk of Russia wanting to accept Bitcoin as a means of payment for gas and oil supplies. David Broadstock, a senior researcher at the Energy Studies Institute in Singapore, has also spoken out and sees Bitcoin as an asset with high growth potential that could help the economy benefit from this choice.  

However, the path does not seem to be entirely downhill considering that many of the existing gas contracts have been signed in euros, which would make the shift towards new forms of payment a hard one.