Ban less likely? Putin says crypto mining has advantages in Russia

Putin says that a surplus of electricity and well-trained personnel gives Russia a “competitive advantage” in crypto mining.

Russian president Vladmir Putin has given crypto enthusiasts a glimmer of hope for the future of digital assets in the country, which have been under threat from a recent push to ban cryptocurrencies and mining.

The strongman leader opened a Jan 26 video conference with members of the Russian government by saying he would like to “start with an issue that is currently in the spotlight — the regulation of cryptocurrencies.”

“Of course, we also have certain competitive advantages here, especially in the so-called mining. I mean the surplus of electricity and the well-trained personnel available in the country.”

According to analysts in spring 2021, the price of electricity in Russia was $0.06 per kilowatt-hour for household use and $0.08 for business. To compare, in France, a kWh of electricity costs $0.2 for householders and $0.14 for business, which is 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 might come to a consensus on the use of crypto.

Last Thursday, Russia’s central bank published a report proposing a blanket ban on domestic crypto trading and mining. The report stated that the risks of crypto are “much higher for emerging markets, including Russia.”

Russia’s Central Bank has held concerns regarding crypto for some time now. In Dec 2021, Central Bank of Russia governor Elvira Nabiullina said: “We cannot welcome investments into cryptocurrencies”

Yesterday, Russian Finance Minister Ivan Chebeskov responded with opposition to the proposed blanket ban, calling for regulation rather than restriction. He highlighted that a ban on crypto would cause the country to fall behind the worldwide tech industry.

“We need to give these technologies the opportunity to develop.”

Meanwhile, Putin assured his parliamentarians that “the Central Bank does not stand in our way of technical progress and is making the necessary efforts to introduce the latest technologies in this area of activity.”

Despite these assurances, Putin conceded that expanding the use of crypto “carries certain risks,” given its “high volatility.”

While Russia’s Central bank has been skeptical of crypto for quite some time, Putin’s opinion has remained somewhat unclear. In Nov 2021, he pointed out that crypto is “not backed by anything, [and] the volatility is colossal.”

Back in 2020, the Central Bank announced that it was studying the possibility of a digital ruble, with prototype testing planned for this month.

In a recent post on his messaging platform, Telegram CEO Pavel Durov wrote that the proposed ban on crypto would “destroy a number of sectors of the high-tech economy.”