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Russia’s plan to build out Bitcoin mining in other countries could inspire other nations to do the same domestically.
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Russia’s plans to construct Bitcoin mining and AI computing facilities in BRICS nations could inspire other nations to tap into state-owned resources to mine Bitcoin, says an industry analyst.
“Game theory is now in motion,” Nico Smid, founder of Digital Mining Solutions, told Cointelegraph, explaining other countries will likely follow the likes of El Salvador, Bhutan, Ethiopia, the United Arab Emirates and Russia in monetizing underutilized energy to mine Bitcoin (BTC).
In mid-October, during the BRICS Business Forum in Moscow, Russia’s sovereign wealth fund partnered with Russian data center operator BitRiver to construct Bitcoin mining and AI computing facilities for BRICS nations.
The project could see the BRICS nations settle global trade in Bitcoin — an alternative to the basket of local currencies and gold-back currency ideas initially considered.
BRICS is a group of major emerging economies that initially comprised Brazil, Russia, India, China and South Africa — but expanded in 2024 to include Egypt, Iran, Saudi Arabia, Argentina, Ethiopia and the United Arab Emirates.
It currently has a combined gross domestic product larger than the G7 nations — a rival economic alliance led by the United States, Japan and Germany.
The news largely went under the radar as the crypto industry continues to “hyperventilate” over the upcoming United States election, VanEck’s Head of Digital Assets Matthew Sigel told CNBC on Oct. 28.
Russia’s sovereign wealth fund is investing in Bitcoin mining infrastructure throughout BRICS nations with the idea of settling global trade in Bitcoin
— VanEck’s Head of Digital Assets @matthew_sigel on @SquawkCNBC pic.twitter.com/lhJeMhbddO
— Business Blurb™ (@businessblurbb) October 28, 2024
“There’s tremendous urgency outside of the US to find a way to circumvent the irresponsible fiscal policy that we’ve been running in the US,” Sigel stressed in the CNBC interview.
Three BRICS members — Argentina, Ethiopia and the United Arab Emirates — are already leveraging state-owned resources to mine Bitcoin.
Related: 3 signs Bitcoin’s ‘parabolic phase’ with a $250K target is about to begin
Alen Makhmetov, a founder at Hashlabs Mining, told Cointelegraph that Russia’s Bitcoin mining and AI plans could be part of a broader attempt to gain a geopolitical edge.
“With limited IT infrastructure in these regions, Russia sees a chance to expand its influence,” Makhmetov explained.
“This aligns with its broader foreign policy of strengthening ties within BRICS as US support for these nations wanes.”
JUST IN: BRICS to use digital currencies for investment developments. pic.twitter.com/i7u7JFsC55
— BRICS News (@BRICSinfo) October 18, 2024
Russia’s BRICS plan would also “positively impact” Bitcoin as a significant portion of the network’s hashrate is currently concentrated in the US, Smid said.
“It creates opportunities for older mining equipment to remain productive in regions with lower energy costs, where mining at the current location might otherwise be unprofitable.”
It comes as Russia is set to lift its Bitcoin mining ban on Nov. 1 — but not without constraints.
It mandates all Bitcoin miners to register with Russia’s Federal Tax Registry and submit lists of machine models and wallet addresses, Makhmetov said.
The lifting of the Bitcoin mining ban isn’t guaranteed to be smooth sailing either, with Russia currently facing rising electricity costs and devaluation of its ruble, Makhmetov said.
“Russia is no longer a country with abundant, low-cost hydropower—electricity is becoming expensive due to a combination of excessive demand and the ruble devaluation.”
Magazine: AI may already use more power than Bitcoin — and it threatens Bitcoin mining
This article first appeared at Cointelegraph.com News
