President of Russia says crypto ‘may exist as means of payment’

In an interview at the Russian Energy Week International Forum 2021, Russian President Vladimir Putin voiced skepticism about cryptocurrency's potential use beyond payment. As he said,

"It is premature to discuss the trading of anything in crypto sources."

He said, however, that it may "exist as a method of payment."

"Cryptocurrencies are not currently backed by anything."

As a result, he said that it is too early to remark on its use in the oil and other main energy markets. Additionally, he said,

"However, bitcoin production requires massive amounts of energy. And so far, we must rely on conventional hydrocarbons."

Putin's remarks reaffirm that Russia may not attempt to regulate cryptocurrency trading in the nation. Recently, Russia's financial watchdog said that it would not impose a ban on cryptocurrencies on international exchanges in the manner of China. On the other hand, by accepting Bitcoin as legal currency, it is not on the verge of becoming the next El Salvador.

Russian authorities made it very apparent last year that the nation is not prepared for such a move. However, the country's laws have been tightened to "protect investors." Anatoly Aksakov, chairman of the Russian State Duma Committee on Financial Markets, recently said,

"Deputies of the State Duma will consider a legislative ban on unqualified investors' investments in cryptocurrencies and crypto-assets in order to safeguard private investors."

Soon after Putin's remarks on crypto's energy use, local sources indicated that the Russian Ministry of Energy is also considering introducing special power rates for crypto miners. Due to China's anti-crypto stance, miners have relocated to various places worldwide, including Bratsk.

The area is well-known for its cheap energy, and the region's chilly temperature is regarded favorable for mining. As of August 2021, Russia accounted for more over 11% of the average worldwide monthly hash rate. This is the world's third-highest proportion, behind only the United States (35.4 percent) and Kazakhstan (18 percent ).

However, as a result of recent events, miners will have to pay more for energy, since the government does not want "miners' electricity usage at population prices."

Due to the increasing demand for energy, Nikolai Shulginov, the chairman of the Ministry of Energy, said,

"Miners cannot exploit the situation and exacerbate it at the cost of lower rates for the populace."

Additionally, Irkutsk Region Governor Igor Kobzev suggested categorizing mining as an entrepreneurial activity. As a result, special business rates on crypto mining will be immediately applied.

This is in response to worries about coming winters, which may expose the area to "emergency" situations owing to power shortages, he said.

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