Russian President Vladimir Putin warned of The looming energy problem It resulted from the rampant growth of Bitcoin mining in his country.
Putin stressed that mining activities consume huge amounts of energy, noting that these operations represent about 1.5% of the total electricity consumption in Russia. This is equivalent to about 16 billion kilowatt-hours per year.
The president’s concerns are particularly focused on regions such as Irkutsk, Buryatia and Zabaikalsky Krai, where electricity shortages have recently become persistent.
Although they are not traditional money, cryptocurrencies are increasingly used in international settlements, Putin said, emphasizing that High energy consumption Participate in cryptocurrency mining.
Russia Southern Africa has become a hub for these operations due to low energy prices and easy transportation of mining equipment. The president warned that uncontrolled mining expansion could negatively impact regional energy systems to the point of collapse.
Social and economic consequences
This energy drain has consequences that go beyond operating costs. Putin emphasized the broader social and economic risks, noting that energy deficiency This could affect businesses, housing systems, public services, and the overall growth of cities and towns.
The president’s remarks reflect concerns expressed by regional leaders about potential disruption to new businesses, residential neighborhoods and important social facilities.
“The uncontrolled increase in electricity use for cryptocurrency mining may lead to energy shortages in some locations,” Putin said.
Putin: Digital Ruble a Rescue Tool
Amid the chaos caused by Bitcoin mining, Putin also seized the opportunity to promote Russia’s digital ruble, or central bank digital currency (CBDC).
The digital ruble initially started as a test program, and has already enabled 7,000 payments for products and services, as well as more than 27,000 transfers. Putin has urged the use of the currency, citing the figures as evidence of its “performance and usefulness.”
Source: Payments Cards & Mobile
The digital ruble is a pillar of Russia’s larger plan to modernize its financial system and reduce reliance on Western financial institutions, and is among the top agendas of Russia’s economic planner as the country negotiates the effects of Western sanctions on its economy.
In this regard, Putin’s government is pushing companies to investigate the use of cryptocurrencies and other digital assets as an alternative to international transaction solutions.
Reconciling opportunities and difficulties
The balance between economic benefits and potential risks remains difficult as Russia struggles to achieve the dual task of controlling the growing cryptocurrency mining industry and developing digital currency infrastructure. Putin’s demand for a digital ruble and his call for legislative action point to a greater urgency to address these needs.
Featured image by Getty Images, chart by TradingView