The IMF, an agency of the United Nations that works as a financial institution to oversee global economic development, has warned that Russia could make use of cryptocurrency mining to dodge sanctions. Financial penalties were levied on the transcontinental country after its invasion of Ukraine in an attempt to disrupt global peace.
Cryptocurrency mining is a computational process that involves verifying transactions and adding “blocks” of these verified transactions to a blockchain-based digital ledger. The mining process requires machines with immense computing power to basically solve complex mathematical ‘puzzles’ in order to generate revenue in the form of Bitcoin. This can be extremely profitable given you have the right resources.
The IMF warns that Russia, with its mother lode of resources, can turn to cryptocurrency mining as a way to generate revenue to evade sanctions levied on it. “Mining for energy-intensive blockchains like Bitcoin can allow countries to monetize energy resources, some of which cannot be exported due to sanctions,” says the IMF. Basically, Russia can avail the benefits of crypto mining effortlessly given how it is in a beneficial position with its abundance of resources. And even though this can help them to adeptly avoid sanctions, for now the measure of such revenue is “relatively contained”, according to the International Monetary Fund.
According to a study published last year by Cambridge University, Russia ranks third in Bitcoin mining, right after the US and China. The usage of crypto exchanges that do not comply with the levied sanctions, could propel Russia into generating significant revenue to dodge a large percentage of the sanctions. Even though it is difficult to escape the sheer quantity of international sanctions imposed upon the country using solely profits from cryptocurrency mining – it would still go a long way to enable Russia to get around tough financial corners. Given its barbaric acts that has sown seeds of conflict among nations worldwide, it is difficult to say if Russia will truly be given any chance to salvage its economy.
