Russian President Vladimir Putin signed a law legalizing cryptocurrency mining in Russia on August 8, TASS reported.
As early as January 20, 2022, the Central Bank of Russia proposed a complete ban on the use of cryptocurrency transactions and mining operations in Russia.
More than two years have passed, why has the policy taken such a 180-degree turn?
The core reason is: no money!
Since the outbreak of the Russo-Ukrainian war, Russia's foreign exchange reserves have apparently not been affected, and the foreign exchange reserves are still close to 600 billion.
But the structure is very different.
Before the outbreak of the Russia-Ukraine war, 22% of Russia's foreign exchange was gold, and the rest was various foreign currencies, with the RMB accounting for only 13%.
The ratio before the war was very healthy, and it seemed that the exchange rate fluctuations of any country had no impact on Russia.
But after the outbreak of the Russo-Ukrainian war, the first thing that happened was that half of Russia's gold and foreign exchange were frozen.
Yes, gold will be frozen too.
Because most of the gold transactions in the country are in the vaults of the UK or the US and will not leave the country.
Russia was kicked out of Swift by the United States, resulting in almost 100% of Russia's trade now being settled in RMB.
Even the Russian Central Bank stated at the beginning of this year that the RMB has become the only and best choice for Russia's foreign exchange reserves.
Therefore, most of the foreign exchange Russia can use now should be in RMB.
But the Russian government elites don't know the principle of diversifying investments and not putting all your eggs in one basket.
In this context, if Russia can use its abundant resources to develop Bitcoin mining business, it can not only earn foreign exchange for Russia, but also balance the current situation of full dependence on RMB.
Therefore, the Bitcoin mining bill signed by Putin also stipulates that according to the document, only registered Russian legal entities and individual entrepreneurs have the right to mine. Individuals who are not included in the register but do not exceed the energy consumption limit set by the Russian government also have the right to mine cryptocurrencies.
Among the major assets now, apart from the RMB, the only thing Russia can reserve is probably Bitcoin.
But now that Bitcoin has halved, I remember the benefits of Bitcoin 😅
