On February 15, the Russian Ministry of Economic Development signaled a bullish development around Bitcoin; reduced costs for bitcoin miners. But what can we make of this?
First the obvious: yes it is bullish. The Russian Ministry[1] is reportedly considering “energy tariffs” for bitcoin (and other cryptocurrency) miners, as well as taxing cryptocurrency-to-ruble conversions — as long as said facilities are constructed in particular regions (you don’t want bitcoin miners just popping up anywhere, not that they operate in this manner, anyway).
One of the justifications from the ministry (as noted here[2]) has been that bitcoin mining incentivizes great increases in energy generation, while allowing for rapid pivoting of demand by the grid. This means that if energy demand were to shift quickly, say in the wake of unorthodox weather situations, then the grid has the capability to limit or shutdown miners with the intent of supplying energy demand where it is most pertinent.
Secondly, this places pressure on Western powers. The U.S., the United Kingdom and the European Union have been slow to make concrete decisions on Bitcoin and Bitcoin mining facilitation. Which isn’t surprising in the least; not only does Bitcoin’s censorship resistance and decentralization threaten the feasibility of the SWIFT system, but they also make controls over capital flight much more difficult to enforce.
Furthermore, there is concern around inflation sticking around[3], particularly as it might affect the price of energy. This is another area in which Russia may play a pivotal role, as incentivizing bitcoin miners to bring business within their jurisdictions would not only provide economic stimulation to in the form of infrastructure projects, but would also strengthen the resilience of the grid by providing an additional source of monetization that is demand-flexible.
