Less likely to ban? Putin says cryptocurrency mining has advantages in Russia

Russian President Vladimir Putin has offered cryptocurrency enthusiasts a glimmer of hope for the future of digital assets in the country. More recently, the country's efforts to ban cryptocurrencies and mining have posed a threat to digital assets.

The strong-armed leader said in a Jan. 26 video conference with members of the Russian government that he wanted to “start with an issue that is currently gaining traction — the regulation of cryptocurrencies.”

“Of course, we also have certain competitive advantages in terms of technology, especially in so-called mining. I mean domestic power surplus and well-trained personnel.”

According to data from analysts in the spring of 2021, electricity costs in Russia are $0.06 per kWh for households and $0.08 per kWh for businesses. In contrast, in France, household electricity needs 0.2 US dollars per kWh, and business electricity needs 0.14 US dollars per kWh, which is 4 times more expensive than in Russia.

He also called on the country's central bank to meet with his government in the near future so that they might come to a consensus on the use of cryptocurrencies.

Last Thursday, Russia’s central bank released a report proposing a blanket ban on domestic cryptocurrency trading and mining. The risk of cryptocurrencies is "significantly higher for emerging markets, including Russia," the report said.

The Central Bank of Russia has been concerned about cryptocurrencies for some time. In December 2021, Elvira Nabiullina, Governor of the Central Bank of Russia, stated: "We do not welcome investments in cryptocurrencies."

Yesterday, Russian Finance Minister Ivan Chebeskov voiced opposition to the proposed blanket ban, calling for regulation rather than restrictions. He emphasized that banning cryptocurrencies would cause the country to fall behind the global tech industry.

"We need to give these technologies a chance to grow."

At the same time, Putin assured his lawmakers that "the central bank will not hinder our technological progress and is making the necessary efforts to introduce the latest technologies in this field of activity."

Despite the assurances, Putin acknowledged that expanding the use of cryptocurrencies "has some risks" given their "high volatility."

While Russia’s central bank has been skeptical of cryptocurrencies for some time, Putin’s views remain somewhat unclear. In November 2021, he noted that cryptocurrencies "are not backed by anything and are highly volatile."

As early as 2020, the Russian central bank announced that it was studying the possibility of a digital ruble and planned to conduct a prototype test this month.

Telegram CEO Pavel Durov recently posted on his messaging platform that Russia’s proposed ban on cryptocurrencies would “destroy many sectors of the high-tech economy.”

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