In a conference call this week, Russian president Valdimir Putin asked government officials and members of the Russian Central Bank to continue assessing cryptocurrencies. His comments came less than a week after the central bank released a proposal to completely ban the use and mining of cryptocurrencies on Russian territory.
In last week’s proposal, the central bank argued that cryptocurrencies were driven largely by speculative trading, had high price volatility, and that mining was too energy-intensive. During this week’s conference call, Putin acknowledged that cryptocurrencies involved “certain risks, first and foremost to citizens of the country, given significant volatility.” However, he also encouraged officials to consider the potential advantages of adopting a more positive attitude toward cryptocurrencies.
Putin also took a more positive stance on cryptocurrency mining in Russia, saying “we also have here certain competitive advantages, especially in so-called crypto-mining. I mean surplus in electricity and well-trained teams present in the country.” Indeed, following China’s crackdown on mining last summer, Russia’s cheap electricity, rich natural resources, and cold temperatures made it a hotspot for miners relocating their operations.
According to data from the Cambridge Centre for Alternative Finance, as of July 2021, Russia ranked third in global hashrate on the bitcoin mining network, contributing 11.2% of hashrate, behind only the United States and Kazakhstan. Recent political instability in Kazakhstan, which shares a 7,644-kilometer border with Russia and contributes 18.1% of the global hashrate, may have miners looking to migrate to countries with a more positive and consistent stance toward the industry. If Russia adopts such a stance, their close proximity to Kazakhstan may drive more miners into the country.