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THE LATEST FROM PUTIN AND XI SUGGESTS AN INCREASING POLITICAL INTEREST IN BITCOIN

On February 4, news broke that Russian President Vladimir Putin had issued a letter to the people of China, which was published by a local news agency and detailed ongoing trade and mutually beneficial infrastructure projects between the two countries.

Chinese President Xi Jinping and Russian President Vladimir Putin also met in Beijing ahead of the start of the 2022 Winter Olympics, which will be held in Beijing, and exchanged some heated words. Following that meeting, the leaders issued a joint statement in which they confirmed Russia’s support for China in its disputes with Taiwan, expressed concerns about a defence alliance led by Australia, the United Kingdom, and the United States, and criticised Nato’s expansion, among other things.

SANCTIONED NEIGHBOURS MAY TURN TO BITCOIN

Among all of the geopolitical lines that these two leaders are drawing, one issue in particular could foreshadow future attitudes toward Bitcoin. Russia and China have been in the crosshairs of many tense political issues, and both have recently been threatened with economic sanctions, so it is unsurprising that the two neighbours are seeking alliances in trade and scientific development.

“We are consistently expanding settlements in national currencies and developing mechanisms to mitigate the negative impact of unilateral sanctions,” Putin said in his letter to the Chinese people. “A significant milestone in this work was the signing of an agreement on payments and settlements in 2019 between the Governments of Russia and China.”

This comes on the heels of threats to cut Russia off from the SWIFT system made just a few days ago. Russia is particularly well-positioned to avoid sanctions, given its treasure trove of forex reserves, which was valued at more than $600 billion just five months ago.

Do these actions imply a desire by one or both superpowers to pursue a strategy of broader Bitcoin adoption?

It doesn’t appear to be a far-off possibility. As various sources reported late last month, Russia’s Central Bank proposed a ban on Bitcoin, but Putin (backed by other members of government) pushed back, claiming that Russia stood to gain benefits from bitcoin and mining. Only one day before, Belarus signalled an interest in maintaining its liberal approach to bitcoin.

READY TO READ BETWEEN THE LINES

To increase the likelihood of implied interest in bitcoin, we must read between the lines. During the current energy crisis, China, as well as members of the EU, have been under pressure. The drought that has been occurring in China this winter is particularly noteworthy, resulting in warnings of uncharacteristic and unannounced water supply cuts. Droughts have reduced hydropower outputs in Yunnan province in particular, affecting a major power supplier to Guangzhou, the capital of Guangdong. In terms of trade activity, Guangdong is regarded as China’s “powerhouse.” If the power supplier for such a vital trade source for China has a problem, President Xi has a problem.

Another section of Putin’s letter is particularly telling in this context:

“Our countries are forming a mutually beneficial energy partnership.” In addition to long-term oil and gas supplies to China, we intend to carry out a number of large-scale joint projects. One of them is the construction of four new power units at Chinese nuclear power plants with the participation of Rosatom State Corporation, which began last year. All of this significantly strengthens China’s and the Asia region’s energy security.”

Putin appears to recognise the value that bitcoin brings in terms of providing incentives for expanded and robust power production (from all sources), as well as the environmental benefits that bitcoin mining yields by providing a use case for flare gas. Furthermore, bitcoin has likely proven desirable in terms of censorship resistance in the face of threats by western nations seeking to cut Russia off from the SWIFT system

.Last but not least, there is the foundation for the network’s decentralisation. The number of reachable Bitcoin nodes around the world is rapidly approaching a daunting 15,000 figure. It’s worth noting that these are only the nodes that aren’t obfuscated by Tor or other privacy tools, which means we have no idea what the actual number is, but it’s probably higher than this estimate.

Bitcoin continues to demonstrate its worth to the world, and it appears safe to predict that more countries will express interest in the future. Buckle up, Bitcoiners, the second month of the year has only just begun.

 

Disclaimer: These are the writer’s opinions and should not be considered investment advice. Readers should do their own research.

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