Key Takeaways
- Over 9 million Russian citizens are estimated to own over $200 billion in crypto.
- Bitcoin mining is now legalized in Russia, and Russian mining infrastructure is being exported to BRICS member states.
- Russia claims to have domestic miners yielded approximately $5 billion worth of Bitcoin in 2023.
Russia’s central bank has announced that it will cease buying foreign currency on the domestic market for the remainder of 2024 as the ruble hits a 20-month low.
With regulations on crypto and mining now being implemented in the country, Russia may begin leaning more on digital assets to dampen the woes of its faltering economy.
Ruble Slumps
As per a release from the Central Bank of Russia (CBR), the bank will be suspending foreign currency purchases until 2025. This is in a bid to ease market volatility following the ruble slumping to its lowest value since March 2022. The CBR said in a statement:
“The deferred purchases will be carried out during the course of 2025”
The CBR has said it will begin offloading its reserves of Chinese yuan at 8.4 billion rubles a day, or roughly $75 million.
Anton Siluanov, Russia’s Finance Minister, optimistically noted that it’s a double-edged sword. A weaker ruble offers benefits to domestic exports, but can also contribute to rising inflation.
Reuters speculates this could increase the current inflation rate closer to 10%.
Russia is a major buyer of gold and has acquired almost 2,000 tonnes over the past two decades. Additionally, between Nov. 7 and Dec. 5, the finance ministry had set out plans to purchase swathes of gold. More specifically, 4.2 billion rubles a day, or roughly $38.4 million.
These hundreds of billions worth of gold reserves have given Russia unprecedented means of skirting economic sanctions to make vital war-time purchases, such as drones from Iran or trading gold for cash in Turkey.
A Safe Haven in Crypto?
Russia is rapidly gearing up to bring its sleeping crypto industry to life with tax and energy regulations that will legitimize Bitcoin mining. But it’s not without its troubles, as legitimizing a new energy-intensive sector under a war-strained economy is no easy feat.
This effort could form the backbone of its future-looking economic strategy if it manages to pull off the mining push, and shift a huge chunk of its gold reserves into Bitcoin.
Sergey Bezdelov, director of Russia’s Industrial Mining Association, said that 54,000 BTC tokens were mined in 2023. This would be worth around $5 billion at today’s prices.
If in the possession of the government, that would put it on par with some of the top Bitcoin-holding countries in the world. It would sit between the U.K. which holds 61,245 BTC, and Ukraine which has an estimated 46,351 BTC.
The CBR has advised domestic companies to explore crypto as a solution for payments and transactions with foreign partners. It stands to reason that citizens would heed this advice.
An estimated 9 million Russians own cryptocurrencies. Furthermore, the Kremlin reported in 2022 that Russian citizens hold $214 billion in crypto. At today’s prices, this will be substantially higher.
Power Projection
Having a sizeable amount of hashing power and “control” within the Bitcoin mining network has legitimate geopolitical implications that could work in Russia’s favor.
It would also go on to further the aims of the BRICS group, which is vying to establish an economic system independent of the U.S. dollar and the Euro. BRICS are working to use blockchain to conduct transactions with one another. This includes plans for a stablecoin.
Furthermore, Russia is reportedly supplying mining hardware and expanding to BRICS member states, broadening its potential to project power and dampen economic sanctions.
Eddie is a gaming and crypto writer at CCN. Covering the often weird and wonderful world of Web3 with an adoring, but skeptical eye.
Prior to CCN, Eddie has spent the past seven years working his way through the crypto, finance, and technology industry. He began with PR and journalism with Bitcoin PR Buzz and BitcoinNews.com, eventually working his way to become a copywriter with a dozen firms, including the likes of Polkadot before returning to journalism in 2023.
Having studied Radio production and journalism at University in the UK, Eddie spent a few years making podcasts and presenting on a local London radio station as he built up his writing chops.
A lifelong skateboarder, Eddie can often be found at the skatepark or touring the streets looking for something new to try. That, or kicking back playing JRPGs on his original PSP.
