No, Putin Isn’t Embracing Cryptocurrency Just Yet

No, Putin Isn’t Embracing Cryptocurrency Just Yet
Russia's President Vladimir Putin speaks during a United Russia ruling party's members meeting in Moscow on August 22, 2021. (Photo: Mikhail Voskresenskiy/Sputnik/AFP, Getty Images)

Russian President Vladimir Putin gave a tentative and halfhearted approval to cryptocurrencies like bitcoin on Thursday, signalling that it’s something he may accept as a legitimate payment option in the future. Perhaps the very distant future, if we’re being honest.

While news outlets like Bloomberg have arguably oversold Putin’s enthusiasm for cryptocurrencies this morning — even going so far as to use a headline that said he “defended” crypto — Putin’s actual words are much more nuanced.

Putin made his remarks about cryptocurrencies during an interview with CNBC that hasn’t been aired yet, but was published online by the Kremlin in text form early Thursday. Crypto came up when CNBC asked Putin about whether oil contracts could eventually be settled in cryptocurrencies rather than dollars.

“Cryptocurrency contracts? It’s too early to talk about this, because cryptocurrency, of course, can be a unit of account, but it is very unstable. In order to transfer funds from one place to another — yes, but to trade, let alone trade in energy resources, in my opinion, is still premature,” Putin told CNBC in Russian. 

“The cryptocurrency is not backed by anything yet. It exists and as a means of calculation can be used, of course, yes, but trading in oil, say, or other primary materials and energy sources — still, it seems to me, it’s too early to talk about this for now,” Putin continued.

But Putin also left the door open and suggested that he’s not completely hostile to cryptocurrencies.

“But everything develops, everything has the right to exist. We will see how it will go further, maybe someday it may also be a means of accumulation. We see this market fluctuate. It’s a bit early today,” Putin said.

The interviewer then went on to ask whether guys like billionaire Elon Musk were dabbling in something that’s potentially worthless. Infamously, Musk has helped manipulate the bitcoin and dogecoin markets with his tweets and even bought $US1.5 ($2) billion in crypto through his electric car company Tesla at the beginning of 2021.

“You need, you know about this, a huge amount of energy,” Putin explained.

Though his broad “everything has the right to exist” statement is less than genuine, generally, he’s not wrong. You do need a lot of energy to produce cryptocurrencies. In fact, mining bitcoin consumes more energy than the entire country of Argentina, according to recent research. And if it keeps being a huge energy-suck, winters in Putin’s retreat in Sochi are going to get a whole lot warmer.