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Russia's Bitcoin mining strategy could inspire global trends

Russia's Bitcoin mining strategy could inspire global trends

GrafaGrafa2024/10/31 10:00
By:Mahathir Bayena

Russia's initiative to develop Bitcoin (CRYPTO:BTC) mining and AI facilities within BRICS nations may encourage other countries to utilise their state-owned resources for Bitcoin mining, according to industry analyst Nico Smid. 

In an interview, Smid stated, “Game theory is now in motion,” suggesting that nations like El Salvador, Bhutan, Ethiopia, the United Arab Emirates, and Russia are likely to monetise underutilised energy resources for Bitcoin production. 

This development follows a partnership established in mid-October between Russia’s sovereign wealth fund and BitRiver, a data center operator, aimed at constructing Bitcoin mining and AI computing facilities for BRICS countries. 

The project could potentially enable BRICS nations to conduct global trade using Bitcoin, offering an alternative to previously considered local currencies and gold-backed currency systems. 

BRICS, initially comprised of Brazil, Russia, India, China, and South Africa, expanded in 2024 to include Egypt, Iran, Saudi Arabia, Argentina, Ethiopia, and the UAE. 

This coalition now boasts a combined gross domestic product greater than that of the G7 nations, which include the United States, Japan, and Germany. 

Matthew Sigel from VanEck noted that while the crypto industry is focused on the upcoming U.S. election, there is significant urgency among other nations to find ways to navigate what he described as “irresponsible fiscal policy” in the U.S. 

Currently, Argentina, Ethiopia, and the UAE are already leveraging state resources for Bitcoin mining. 

Alen Makhmetov from Hashlabs Mining indicated that Russia's plans may also serve a geopolitical purpose by expanding its influence in regions with limited IT infrastructure. 

He explained that this aligns with Russia's foreign policy objectives of strengthening ties within BRICS as U.S. support for these nations declines. 

Smid added that Russia’s strategy could positively affect Bitcoin's network by redistributing the hashrate away from its current concentration in the U.S. 

However, challenges remain as Russia prepares to lift its Bitcoin mining ban on November 1. 

The new regulations will require miners to register with the Federal Tax Registry and disclose their equipment and wallet details. 

Makhmetov cautioned that rising electricity costs and ruble devaluation could complicate this transition. 

“Electricity is becoming expensive due to excessive demand and the ruble devaluation,” he noted.

At the time of reporting, the Bitcoin price was $72,260.92.

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Disclaimer: The content of this article solely reflects the author's opinion and does not represent the platform in any capacity. This article is not intended to serve as a reference for making investment decisions.

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