Less likely to ban? Putin Says Cryptocurrency Mining Has Advantages in Russia

Russian President Vladimir Putin has given 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 iron-fisted leader said during a video conference with members of the Russian government on Jan. 26 that he wanted to “start with an issue that is currently in the spotlight — the regulation of cryptocurrencies.”

“Of course, we also have a certain competitive advantage in terms of things, especially in so-called mining. I mean the domestic surplus of electricity and well-trained personnel.”
According to analysts' data in spring 2021, electricity costs in Russia are $0.06 per kWh for households and $0.08 per kWh for businesses. By comparison, in France, electricity costs $0.2 per kWh for households and $0.14 per kWh for businesses, four 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 may reach a consensus on the use of cryptocurrencies.

On Thursday, Russia’s central bank released a report proposing a blanket ban on domestic cryptocurrency trading and mining. According to the report, the risks of cryptocurrencies are “much higher for emerging markets, including Russia.”

The Russian central bank has been concerned about cryptocurrencies for some time. In December 2021, Elvira Nabiullina, the governor of Russia’s central bank, stated: “We do not welcome investments in cryptocurrencies.”

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

"We need to give these technologies a chance to develop."
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 technology in this field of activity."

Despite these assurances, Putin acknowledged that expanding the use of cryptocurrencies "has certain 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.”

Back in 2020, Russia’s central bank announced that it was looking into the possibility of a digital ruble, with a prototype test planned for 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.”