After ten months of fighting in Ukraine, Russia has said it may increase energy production to meet the growing demand from cryptocurrency miners. The Federation’s efforts to make crypto a legitimate way to do business around the world are likely a factor in the rise in cryptocurrency mining. Russia’s energy minister has acknowledged that Siberia may need new power plants to keep up with industrial electricity demand.
Russia Faces Sanctions from EU and US
Since its “special military operation” began in Ukraine, Russia has been the target of criticism at home and abroad. Both the EU and the US have imposed sanctions on the country, and now the EU has shut off the country’s access to the SWIFT financial network, and the US has frozen the country’s overseas assets.
According to Russia’s Minister of Energy, new power plants may need to be built in Siberia to keep up with the growing demand for electricity from businesses. Since Russia’s “special military exercise” began in Ukraine, that country has been the center of attention inside and outside its borders.
Banks in the nation have been disconnected from the SWIFT system, and the EU and the US have placed a freeze on assets held by the banks in other countries.
Russia Follows India in Regulating Digital Assets
Many local press and media articles focusing on cryptocurrency say that Shulginov knows that more power generation capacity is needed. Russia has followed India’s lead in regulating digital assets, with Moscow even contemplating a digital Ruble while meeting the energy needs of crypto miners.
The sanctions that the West put on the country are largely to blame for the big change in public opinion, which went from completely banning Bitcoin to letting it be used. Since the West has few rules about how cryptocurrency can be used in international trade, Russia can use it to do business worldwide.
While the country saw a surge in mining earnings last year, the government is still not convinced that bitcoin should be legal tender. On the contrary, the Russian Federation plans to use crypto to “boost foreign trade.”
As Shulginov mentioned, the Energy Ministry’s stance has always been predicated on the necessity of facilitating mining operations. The cryptocurrency market would be affected by an increase in energy generation to support crypto mining. In January 2022, the country was responsible for 8.7% of the world’s Bitcoin hash rate.
This might result in a rush of inexpensive and simple-to-mine cryptocurrencies onto the market, which would lower prices. Even if the Federation views crypto as a tool to promote and expand international business, famous cryptocurrencies like Bitcoin and Ethereum may still face the consequences of this decrease.
Russia might be able to become a hub for Web3 and DeFi after the Ukraine crisis is over and all of its effects have been worked out. This would be the result of the conflict in Ukraine coming to an end. This will be possible because the country will have legalized and regulated digital assets, and mining operations will have grown.
They are moving closer to 2023, but they still do not know if or how the cryptocurrency market will respond to the potential influence of cryptocurrencies on Russia’s stumbling economy.