Why Putin Says Russia Has "Competitive Advantage" In Cryptocurrency Mining

Russian President Vladimir Putin in a video conference held on January 26, told government officials that Russia has a certain “competitive advantage” in mining cryptocurrencies like Bitcoin. He also added that the government should conduct some discussions on the matter to reach a satisfactory “consensus”.

Putin gives hope to Russian crypto investors.

Vladimir Putin, while speaking to government ministers via a video call, pointed out that Russia possesses certain “competitive advantages” while mining cryptocurrencies like Bitcoin.

Putin’s surprising comments come in the midst of Russia’s central bank calls to issue a ban on cryptocurrency trading last week. The central bank of Russia believes that high price volatility and illegal activities related to cryptocurrencies can pose a significant risk to Russian citizens.

The proposed ban is severely criticized by many Russian technology industry leaders including Alexy Navalny’s chief of staff Leonid Volkov, and Telegram founder Pavel Durov.

While Putin acknowledged the risks that cryptocurrencies, in general, possess, include “certain risks, first of all to the citizens of the country, with significant volatility,” he also argued that the government should take a unified approach to cryptocurrency as it offers certain advantages rather than simply banning it.

According to Putin, the additional electricity produced by the country could prove beneficial to cryptocurrency mining and could be used to scale up the crypto mining process.

“We have certain competitive advantages here, especially in so-called mining. I mean an overabundance of electricity and well-trained personnel available in the country,” Putin added.

President Putin further stated that he wants the government to take a unanimous approach to cryptocurrencies and reach a favorable “consensus” on said issue.

By metric, Russia is the third largest cryptocurrency mining country after the US and Kazakhstan. Following the mass exodus of Chinese crypto miners, some of them found refuge in Russia and used the country’s cheap electricity to mine cryptocurrencies. According to business data platform Statista, Russian miners contributed almost 11.2% of the hash rate to the global Bitcoin network in August 2021.

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