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Putin mentioned two factors that could make cryptocurrency not a suitable alternative, namely energy consumed for mining, and the fact that it is not pegged to any asset.
While speaking to CNBC at the Russian Energy Week held in Moscow, Russia's capital on Wednesday (October 13, 2021), Putin was asked if Bitcoin or other crypto could serve as a dollar alternative in oil trades.
In response, the Russian President said that while cryptocurrency had value, he noted that it was not backed by any asset. Putin added that it was
Russia is the world's second largest oil supplier to the United States after Canada. Meanwhile, Russia is already considering moving away from USD-denominated crude oil contracts, if the Biden administration continues to impose targeted economic sanctions. Already, the oil and natural gas-rich country removed the U.S. dollar from its National Wealth Fund.
Commenting on the sanctions, Putin said that the use of the USD by the United States as a sanction instrument was a mistake, with Russia being forced to adopt other currencies for transactions. According to the Russian President:
However, another reason why cryptocurrency may not be suitable for use in the oil trade was the amount of energy used for mining. Bitcoin mining activities have been a cause of concern for environmentalists, with electric car manufacturing giant, Tesla, halting BTC payment for the same reason.
Putin's comment about crypto comes shortly after Russia's Deputy Finance Minister, Alexey Moiseev, said he believes that the country was not planning to impose a blanket ban on cryptocurrency, like China, which continues to crackdown on every aspect of the crypto industry.
According to Moiseev, the government will not prevent Russians from trading crypto on foreign exchanges. A statement bybthe government official said:
However, the use of cryptocurrency for payments remains prohibited in Russia. Back in September, Dmitry Peskov, the Russian Presidential spokesman, revealed that the country was not willing to make Bitcoin a means of payment, adding that there was no motive to adopt such a step.
According to Peskov, enabling BTC payments can