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The Russian President Vladimir Putin is in favor of regulating crypto mining, per a media report.
Russian President Vladimir Putin may be in support of taxing and regulating crypto mining in the country, per a latest Bloomberg report. This is contrary to the Bank of Russia’s proposal for a total ban on crypto mining and trading last week.
Anonymous sources familiar with the matter told the publication that Putin is backing a new proposal by the government that aims to regulate mining—an energy-intensive process that uses specialized computational chips to process transactions on a Proof-of-Work blockchain like Bitcoin.
The report comes a day after President Putin was quoted as saying Russia had “advantages” in crypto mining. In a government meeting held on Wednesday, Putin commented that “we also have certain competitive advantages here, especially in the so-called mining.” Putin referenced the country’s surplus in electricity production, which can be leveraged to support crypto mining.
As such, the Bloomberg report suggests that a new President-backed proposal may permit crypto mining operations to take place in energy-rich regions of Russia such as Irkutsk, Krasnoyarsk and Karelia. Neither the government not the central bank has issued an official notice in this regard.
In terms of Bitcoin mining, Russia is the third-largest country based on its share of the Bitcoin hashrate, a unit of computational power on the network.
The U.S. boasts the leading share of the Bitcoin hashrate globally, according to data released by Cambridge University as of end of August 2021. China, which led the mining industry previously, issued a blanket ban on cryptocurrency last year that prompted larger mining operators to emigrate and enabled American firms to take the lead.
Kazakhstan was ranked the second-largest Bitcoin mining nation in the the same Cambridge report; however, the situation may have changed over the last week, after its government temporary banned mining amid an ongoing energy crisis.
If the latest report is true, Putin’s backing may advance regulations that will legitimize crypto mining industry in Russia. It can also strengthen the country’s global position in the mining sector, presently led by the U.S.
Disclosure: At the time of writing, the author of this piece owned ETH and other cryptocurrencies.
On Thursday, Russia’s central bank called for a complete ban on cryptocurrency use and mining within its territory, citing environmental concerns and threats to financial stability and the sovereignty of…
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Data from Cambridge Centre for Alternative Finance (CCAF) indicates that China’s contribution to Bitcoin’s global mining hashrate has completely declined. U.S. Becomes World Leader for Bitcoin Mining New research data…
An energy crisis and civil unrest threaten the viability of Bitcoin mining in Kazakhstan, just months after the country became the second-biggest producer of the world’s top cryptocurrency. Kazakh Bitcoin…
Russian president Vladmir Putin has given crypto enthusiasts a glimmer of hope for the future of digital assets in the country, which have been under threat from a recent push to ban cryptocurrencies and mining.
The strongman leader opened a Jan 26 video conference with members of the Russian government by saying he would like to “start with an issue that is currently in the spotlight — the regulation of cryptocurrencies.”
“Of course, we also have certain competitive advantages here, especially in the so-called mining. I mean the surplus of electricity and the well-trained personnel available in the country.”
According to analysts in spring 2021, the price of electricity in Russia was $0.06 per kilowatt-hour for household use and $0.08 for business. To compare, in France, a kWh of electricity costs $0.2 for householders and $0.14 for business, which is four times more expensive than in Russia.
He also called on the country’s Central Bank to meet with his government in the near future so that they might come to a consensus on the use of crypto.
Last Thursday, Russia’s central bank published a report proposing a blanket ban on domestic crypto trading and mining. The report stated that the risks of crypto are “much higher for emerging markets, including Russia.”
Russia’s Central Bank has held concerns regarding crypto for some time now. In Dec 2021, Central Bank of Russia governor Elvira Nabiullina said: “We cannot welcome investments into cryptocurrencies”
Yesterday, Russian Finance Minister Ivan Chebeskov responded with opposition to the proposed blanket ban, calling for regulation rather than restriction. He highlighted that a ban on crypto would cause the country to fall behind the worldwide tech industry.
“We need to give these technologies the opportunity to develop.”
Meanwhile, Putin assured his parliamentarians that “the Central Bank does not stand in our way of technical progress and is making the necessary efforts to introduce the latest technologies in this area of activity.”
Despite these assurances, Putin conceded that expanding the use of crypto “carries certain risks,” given its “high volatility.”
Related: Russian tech and political executives denounce crypto ban proposal
While Russia’s Central bank has been skeptical of crypto for quite some time, Putin’s opinion has remained somewhat unclear. In Nov 2021, he pointed out that crypto is “not backed by anything, [and] the volatility is colossal.”
Back in 2020, the Central Bank announced that it was studying the possibility of a digital ruble, with prototype testing planned for this month.
In a recent post on his messaging platform, Telegram CEO Pavel Durov wrote that the proposed ban on crypto would “destroy a number of sectors of the high-tech economy.”
Since hitting an all-time high at $4,870 on Nov. 10, Ether (ETH) price has been posting lower lows over the past 50 days. If this downtrend continues, the lower trendline support suggests that the altcoin will bottom at $3,600. Still, derivatives data is signaling that pro traders are not concerned about the seemingly bearish market structure.
Notice how the price peaks are getting lower on the 12-hour time frame as mounting regulatory concerns drive investors away from the sector. In a press conference on Dec. 17, Russia’s Central Bank governor, Elvira Nabiullina, stated that banning crypto in the country is “quite doable.”
Nabiullina cited crypto’s frequent use for illegal operations and significant risks for retail investors. Russian President Vladimir Putin also recently criticized cryptocurrency by saying they are not backed by anything. Interestingly, the country plans to launch its own central bank digital currency even as the Russian ruble lost 44% against gold over the past four years.
In the United States, a bipartisan group of U.S. senators has called on Treasury Secretary Janet Yellen to clarify the language in the infrastructure bill relating to the crypto tax reporting requirements. Under the current broader “broker” definition, miners, software developers, transaction validators and node operators will likely be required to report digital asset transactions worth more than $10,000 to the Internal Revenue Service.
Even with the regulatory uncertainty and negatively skewed price action, traders should monitor the futures contracts premium — also known as the “basis rate” — to analyze how bullish or bearish professional traders are.
The basis indicator measures the difference between longer-term futures contracts and the current spot market levels. A 5% to 15% annualized premium is expected in healthy markets. This price gap is caused by sellers demanding more money to withhold settlement longer.
However, a red alert emerges whenever this indicator fades or turns negative, also known as “backwardation.”
Notice how the sharp decrease after the 24% intraday crash on Dec. 3 caused the annualized futures premium to reach its lowest level in two months. After the initial panic, the Ether futures market recovered to the current 9% level, which is close to the middle of the “neutral” range.
To confirm whether this movement was specific to that instrument, traders should also analyze the options markets. The 25% delta skew compares similar call (buy) and put (sell) options. The indicator will turn positive when “fear” is prevalent because the protective put options premium is higher than similar risk call options.
When market makers are bullish, the 25% delta skew indicator shifts to the negative area, and readings between negative 8% and positive 8% are usually deemed neutral.
Related: Senate hearing on stablecoins: Compliance anxiety and Republican pushback
For the past three weeks, the 25% delta skew ranged between a positive 3 and 8 which is in the neutral zone. Consequently, options market data validate the sentiment seen in futures markets and signals that whales and market makers are not worried about the recent price weakness.
If investors “zoom-out” a bit, they will see that Ether’s year-to-date gains are at 300%, and this explains why pro traders are not worried about a 20% drop from the $4,870 all-time high.
Furthermore, the Ethereum network’s total value locked in smart contracts doubled over the past six months to $148 billion. This data gives derivatives traders the confidence needed to remain calm even with the current short-term price weakness.
The views and opinions expressed here are solely those of the author and do not necessarily reflect the views of Cointelegraph. Every investment and trading move involves risk. You should conduct your own research when making a decision.
On Tuesday, Vladimir Putin, President of the Russian Federation, voiced his criticism regarding the state of the criticism sector at the “Russian Calling” investment forum in Moscow. According to local news outlet lenta.ru, the president made the following remarks, as translated by Cointelegraph:
“It is not backed by anything, [and] the volatility is colossal, so the risks are very high. We also believe that we need to listen to those who talk about those high risks.”
Putin called for the greater monitoring and regulation of cryptocurrencies and pointed out that certain countries worldwide are seeing significant adoption of digital currencies. Currently, cryptocurrency regulation is still in its infancy in Russia. Although the government is considering the launch of a central bank digital currency, at least eight federal laws and five legislative codes must be changed for the digital ruble to take effect.
Furthermore, no regulation exists in the country regarding cryptocurrency mining. This has led some to claim that $2 billion in crypto mining revenue is generated annually in Russia, but on that, no taxes are paid. Due to the lack of a regulatory framework, cryptocurrency use has soared among ordinary Russians, with transactions surpassing $5 billion each year.
In other parts of the former Soviet Union, cryptocurrencies are also rapidly gaining in traction. Kazakhstan has become the world’s largest Bitcoin (BTC) miner by hash rate, and its president is seeking to collect more taxes from such activities to fund the country’s expenses. In Ukraine, the government is actively encouraging legal crypto operations. Last year, the city of Olsztyn, Poland, began adopting the Ethereum (ETH) blockchain for emergency services.
Russian President Vladimir Putin made new comments suggesting a growing tolerance for Bitcoin and cryptocurrencies during an interview with CNBC that was posted on the Kremlin’s website Thursday, Bloomberg reports.
“I believe that it has value,” Putin told CNBC’s Hadley Gamble at the Russian Energy Week event in Moscow Wednesday. “But I don’t believe it can be used in the oil trade.”
The questions arose out of concern for how Russia would exit dollar-denominated oil contracts due to U.S. economic sanctions.
Putin stated that while Bitcoin and crypto may exist as a means of payment, it is still “too early” to talk about settling crude contracts in Bitcoin or crypto rather than in dollars.
The Russian president also expressed concerns about the energy consumption required to maintain the Bitcoin network, however, he conveyed a clear intention to move Russia away from U.S. dollar reliance.
“I believe the U.S. makes a huge mistake in using the dollar as a sanction instrument,” he said. “We are forced. We have no other choice but to move to transactions in other currencies.” In June, Russia announced it would drop U.S. dollar assets from its sovereign wealth fund.
“In this regard, we can say the United States bites the hand that feeds it,” Putin added. “This dollar is a competitive advantage. It is a universal reserve currency, and the U.S. today uses it to pursue political goals, and they harm their strategic and economic interests as a result.”
While it is still too early to say whether Russia is considering Bitcoin as a store of wealth to replace the dollar, it is clear officials understand the dollar is not viable as a reserve currency in the long term and that Bitcoin may pose a potential neutral alternative.
This comes nearly one month after Dmitry Peskov, the acting press secretary for Russian President Vladimir Putin, said that Russia has no reason to recognize Bitcoin.
Many Bitcoiners are eager to see which country will adopt Bitcoin next in any official state capacity. While Russia may not be a near-term contender for Bitcoin adoption, its government is talking about it because it’s on the table.