Rich in energy, but starved of foreign currency, Russia may use Bitcoin mining to dent the impact of ever tougher sanctions as the war in Ukraine drags on, according to one analyst.
“It wouldn’t be a stretch for the Russian government or certain sanctioned entities to look to mining as a way to get access to Bitcoin,” said David Carlisle, director of Policy and Regulatory Affairs at blockchain analytics firm Elliptic.
“They could be translated to goods and services or just hard cash.”
Countries such as Iran might have already leveraged mining of crypto currencies, which is highly energy intensive, to convert its sanctioned energy into Bitcoin and hard currency for the government.
About 4.5% of Bitcoin mining took place in Iran in the last year, potentially generating $1 billion for the government, Carlisle said.
At the same time, Russia and Belarus have been two of the most welcoming countries after China issued a blanket ban on crypto mining last May.
China was the largest Bitcoin mining hub in the world and some Chinese miners have migrated to central Asia and eastern Europe, including Russia.
Russia’s President Vladmir Putin has backed crypto mining, despite the Bank of Russia’s proposal to ban mining and trading. Belarus said in January it would continue its liberal crypto rules.
Carlisle listed crypto mining along with cyber crime and non-compliant entities such as certain crypto exchanges as three potential ways for Russia to evade sanctions.
However, given the size of Russia’s economy and its financial market, crypto is unlikely to play a big role in helping Russia to circumvent sanctions.