Russia suggests "friendly" countries could pay for gas with bitcoin
Russia could permit use of the bitcoin digital currency to buy gas, but this will only apply to friendly" countries that have not imposed sanctions in the wake of Russia's invasion of Ukraine, The BBC reported March 25.
The head of Russia's State Duma energy committee Pavel Zavalny made the suggestion, which comes after Russian president Vladimir Putin demanded earlier this week that "unfriendly" countries must pay for Russian gas in rubles. Ally and neutral states such as China and Turkey, could also pay in their native currencies and rubles, said Zavalny, who also heads Russian gas association Russian Gas Society.
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"We have been proposing to China for a long time to switch to national currencies for rubles and yuan," Zavalny said. "With Turkey, it will be lira and rubles. You can also trade bitcoins."
Bitcoin is a non-government issued digital currency that resides solely in virtual code spread across thousands of computers. Each bitcoin was worth $44,000 on March 25.
China's communist party has banned bitcoin. It is antipathetic to currency's open nature, which has fuelled illicit financial activities like money laundering. The so-called mining of bitcoin is also extremely energy intensive.
Vladimir Putin said on March 23 that Russia would refuse dollars, euros and other foreign currencies for gas shipments to over 45 countries classified as unfriendly, including leading western powers the US, UK and the EU as well as others like Japan and Singapore. Perhaps unsurprisingly, the move has led to a backlash, with several European buyers stating that the requirement would be a violation of contracts.
In Japan, gas purchasers were doubtful Moscow could apply the policy in practice, according to The Epoch Times. A Japanese LNG spot tender from Tohoku Electric Power on March 25 featured a clause that ruled out Russian cargoes, The Japan Times said.
Putin's move could bolster the ruble's outlook to some degree as speculators may price in higher demand for payments to the world's leading gas producer, although it depends how many buyers actually agree to Putin's demand. The exchange rate was 99 rubles to the US dollar on March 25, down from 102.2 rubles the previous day and 139 rubles two weeks ago. Since the start of 2020, the currency has lost one fifth of its value.