Russian Firms Embrace Bitcoin for Global Trade Amid Western Sanctions

Russian Finance Minister Anton Siluanov revealed on Wednesday that domestic firms are now utilizing Bitcoin and other digital assets for international payments, which is enabled by recent legislative adjustments designed to offset Western sanctions.

It is important to note that these sanctions have posed challenges to Russia’s trade with significant partners such as China and Turkey, as local banks adopt a cautious approach to avoid regulatory backlash from the West.

In a statement to a Russia 24 television channel, Siluanov said,

“As part of the experimental regime, it is possible to use bitcoins, which we had mined here in Russia (in foreign trade transactions). Such transactions are already occurring. We believe they should be expanded and developed further. I am confident this will happen next year.”

Putin Backs Bitcoin as Alternative

President Vladimir Putin stated earlier this month that the US administration’s use of the dollar for political leverage is diminishing its role as the world’s reserve currency. This, in turn, has prompted many countries to explore alternative assets. Highlighting Bitcoin as a prime example, he noted its resistance to regulation on a global scale. These remarks essentially suggested Putin’s endorsement of the growing use of cryptocurrencies.

Bitcoin’s price surge above $100,000 fueled global excitement this month, with Russia seeing an 8% rise in crypto exchange web traffic, as recently reported by MegaFon. Regulatory changes and global trends have also contributed to this growth. MegaFon’s research further noted an 8%-10% monthly increase in visits to the top 20 exchanges globally, with Russian users comprising 27%-30% of total traffic.

Expansion, Crackdown, and Extended Winter Bans

This year, Russia authorized cryptocurrency use in foreign trade and has ramped up efforts to legalize mining activities in a bid to solidify its position as one of the world’s top Bitcoin mining countries.

Russian authorities also intensified their crackdown against illegal crypto-mining with the latest focusing on the Irkutsk region. The Irkutsk Electric Grid Company, in collaboration with law enforcement, shut down an unregistered operation using over 200 ASIC rigs, consuming 600,000 kWh monthly – equal to 80-100 homes. Though registered as a business, it reportedly failed to meet crypto-mining registry requirements.

This comes after Russia extended its winter crypto-mining ban to 2031 which would target regions like Dagestan, Chechnya, and Siberia. Effective January 2025, the ban impacts mining during peak energy seasons. Crypto mining, consuming 1.5% of national power, has caused imbalances in electricity payments and grid strain.