Russian President Vladimir Putin has cautioned of an impending energy problem brought about by the unbridled growth of bitcoin mining in his nation.
Emphasizing the enormous power consumption of mining activities, Putin said that these operations account for about 1.5% of Russia’s overall electricity consumption. This translates to a whopping 16 billion kilowatt-hours yearly.
The president’s worries center especially on areas like Irkutsk, Buryatia, and Zabaikalsky Krai where power shortages have recently become consistent.
While not conventional money, cryptocurrencies are being utilized more and more for international settlements, Putin said, underlining the significant energy consumption involved in digital coin mining.
Russia has become a hub for these operations because of its low power prices and the mobility of mining tools. The president warned that unchecked expansion of mining might take its toll on regional power systems to breaking point capacity.
Social And Economic Consequences
This energy depletion has consequences beyond only running costs. Putin underlined the more general social and economic hazards, pointing out that power shortages might affect businesses, housing and public services systems, and the general growth of towns and cities.
The remarks of the president reflect worries expressed by regional leaders stressing the possible disturbances to new businesses, residential neighborhoods, and important social amenities.
“Unchecked increase of electricity usage for cryptocurrencies mining might lead to a power deficit in some locations,” Putin said.
Putin On Digital Ruble As Saving Agent
Amid the chaos of the bitcoin mining situation, Putin also seized the chance to advance the digital ruble, or central bank digital currency (CBDC), of Russia.
Originally started in a test program, the digital ruble has already enabled 7,000 payments for products and services as well as over 27,000 transfers. Putin has pushed for the use of the currency by stressing these numbers as proof of its “performance and usefulness.”
Source: Payments Cards & Mobile
A pillar of Russia’s larger plan to modernize its financial system and lessen reliance on Western financial institutions, the digital ruble is among the top agenda in Russia’s economic blueprint as the country negotiates the effects of Western sanctions on its economy.
In this regard, Putin’s government is pushing companies to investigate the usage of cryptocurrencies and other digital assets as substitute of international transaction solutions.
Juggling Opportunity And Difficulties
The balance between economic advantages and possible hazards remains tricky as Russia struggles with the double task of controlling the growing mining industry of cryptocurrencies and developing its digital coin infrastructure. Putin’s demand for digital ruble and his request for legislative action show a greater exigency to handle these needs.
Featured image from Getty Images, chart from TradingView