How can sanctions encourage Russia to extract more bitcoins?

Some experts believe that one way for Russia to circumvent Western sanctions is to resort to digging for bitcoins and supplying currency; But to what extent can this scenario be possible?

Following the imposition of Western sanctions on Russia, many experts are debating whether the use of digital currencies could help Russia, according to CryptoSlit. Some argue that digital currencies will be a means of circumventing sanctions, while others argue that the use of digital currencies is useless because there is generally little global trade in Russian rubles and sanctions do not completely isolate Russia.

David Carlisle, director of policy and legislation at Elliptic China Blockchain Analysis, believes Russia’s next step in avoiding sanctions could be to invest in bitcoin mining.

Carlisle said:

The Russian government or some of the sanctioned institutions may use digital currency mining to access bitcoin. Russia can use these bitcoins to buy or sell the goods or services it needs and convert them into money.

Although Russia’s central bank has already voiced its opposition to a total ban on mining and trading in digital currencies, Putin is clearly opposed to such a move and in some ways supports the extraction of digital currencies. Given Russia’s energy resources, will extracting bitcoins be an easy way to circumvent sanctions?

How can sanctions encourage Russia to extract more bitcoins?
Map of bitcoin mining around the world; Darker color means more activity in this country.

Many countries are now investing in digging for digital currency. According to the Institute of Alternative Finance at the University of Cambridge, Russia accounts for 11.3% of the total bitcoin production on the network, second only to the United States and Kazakhstan.

The latest statistics on the share of each country in the hashtag of the bitcoin network can be found in the list below.

  • USA: 35.4%
  • Kazakhstan: 18.1%
  • Russia: 11.23%
  • Canada: 9.55%
  • Ireland: 4.68%
  • Malaysia: 4.59%
  • Germany: 4.48%
  • Iran: 3.11 percent

Bloomberg News reports that increasing Russia’s extraction capacity will not help their resistance to sanctions. Although Russia has an abundance of energy resources, the size of its capital market and economy is also very large. As a result, he will not be able to extract enough bitcoins to make significant financial changes in his economy.

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