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Monday, December 5, 2022

Russia Explores Accepting Bitcoin for Oil and Gas Exports

According to a high-ranking politician, Russia is contemplating accepting Bitcoin as payment for its oil and gas exports.

According to Pavel Zavalny, “friendly” countries might be permitted to pay in crypto or their own currencies.

Russian President Vladimir Putin indicated earlier this week that he wants “unfriendly” countries to buy Russian gas in roubles.

The action is said to be intended to strengthen the Russian ruble, which has lost nearly 20% of its value this year.

Following the invasion of Ukraine, sanctions implemented by the United Kingdom, the United States, and the European Union have put pressure on Russia’s rouble and risen the cost of living.

Russia, on the other hand, remains the world’s largest natural gas exporter and second-largest oil provider.

Mr Zavalny, the chairman of Russia’s State Duma’s energy committee, said on Thursday that the country is looking into alternate payment methods for energy exports.

China and Turkey, he added, were among the “friendly” nations that were “not participating in the sanctions pressure.”

“We’ve been recommending to China for a long time that we convert to national currency settlements for roubles and yuan,” Mr Zavalny added. “It’ll be lira and roubles with Turkey.”

“You can even exchange bitcoins,” Mr Zavalny continued.

Despite the hazards, some believe Russia might profit from embracing the popular cryptocurrency.

“Unprecedented sanctions are having an immediate impact on Russia,” said David Broadstock, a senior research fellow at the Energy Studies Institute in Singapore. “There is a need to strengthen the economy, and Bitcoin is considered as a high-growth asset in many aspects.”

However, he pointed out that Bitcoin’s value has fluctuated by as much as 30% this year. In comparison, the dollar has been trading within 5% of the euro.

“Clearly, embracing Bitcoin creates significantly more risk in the transaction of natural gas as compared to other traditional currencies,” Mr Broadstock added.

“Moreover, China is one of Russia’s most important ‘friendly’ economic partners, and Bitcoin is prohibited in China,” he continued. “This certainly restricts the use of Bitcoin for payment.”

There are fears that Russian oligarchs would use virtual currency to circumvent sanctions.

This has prompted the Ukrainian government, as well as US and European lawmakers, to request that all Russian users be barred from crypto-currency sites.

However, many businesses have ruled this out.

“Now that their currency has collapsed, some regular Russians are adopting cryptocurrencies as a lifeline,” said Brian Armstrong, CEO of cryptocurrency business Coinbase.

“Many of them are likely to reject what their nation is doing, and a ban would harm them as well,” he added.

Mr Putin’s remarks on forcing “unfriendly” countries pay in roubles sent the currency to a three-week high on Wednesday.

However, many current gas contracts are in euros, and it is uncertain if Russia will be able to convert them. For 40% of its gas, the EU is reliant on Russia.

Cedric Blackwater
Cedric Blackwater
Cedric is a journalist with over a decade of experience reporting on local US news, and touching on many global topics. He is currently the lead writer for Bulletin News.

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