Russia might take bitcoin as payment for oil and gas as sanctions rise


Employees walk under pipes leading to oil storage tanks at the central oil and gas processing plant at the Salym Petroleum Development oil fields near the Bazhenov shale formation in Salym, Russia.

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Faced with tightening sanctions by Western countries over its invasion of Ukraine, Russia is considering accepting bitcoin as payment for its oil and gas exports.

in a videotaped press conference held on thursdaysaid the chairman of the energy committee of the Russian Duma in translated comments that when it comes to “friendly” countries like China or Turkey, Russia is willing to be more flexible with payment options.

President Pavel Zavalny said the buyer’s national fiat currency, as well as bitcoin, were being considered as alternative ways to pay for Russia’s energy exports.

“We have been proposing to China for a long time to switch to rubles and yuan in national currencies,” Zavalny said in translated comments. “With Turkey, it will be lira and rubles.”

It didn’t stop with traditional currencies.

“You can also trade bitcoins,” he said.

Bitcoin is up close to 4% in the last 24 hours to around $44,000. The price of the cryptocurrency skyrocketed at the time news reports about Zavalny’s comments first came across.

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The energy chairman also doubled down on President Vladimir Putin’s promise on Wednesday. require “unfriendly” countries to pay for gas in Russian rubles. Putin’s announcement sent Gas prices in Europe soared on concerns the move could aggravate an energy market already under pressure.

“If they want to buy, let them pay or in hard currency, and this is gold for us, or pay as it suits us, this is the national currency,” Zavalny said, in comments that echoed the president’s warning from the day before.

Although the The United States banned imports of Russian oil as part of its response to Moscow’s war against Ukraine, sources have told CNBC the European Union is unlikely to do the same, given its heavy reliance on Russian energy, in part to heat homes during the winter months.

“Russia is clearly looking to diversify into other currencies,” said Nic Carter, co-founder of Coin Metrics. He told CNBC that Russia had been preparing for that kind of transition since 2014, when it started dumping all US Treasuries.

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“But the country wasn’t fully prepared for foreign currency assets to be frozen,” said Carter, who is also a founding partner of Castle Island Ventures, an early-stage cryptocurrency-focused company.

Russia now seems serious about moving away from the dollar.

“They have something the world needs,” Carter said. “Russia is the number one exporter of natural gas globally.”

Russia could potentially convert energy reserves into hard assets that could be used outside of the dollar system.

Putin has changed his tune on bitcoin. In 2021, the Russian leader told CNBC’s Hadley Gamble that while he believed that Bitcoin had value, he was not convinced that it could replace the US dollar in the settlement of oil transactions. Now, the Kremlin’s top brass is weighing it as a form of payment for major exports. However, it is unclear whether bitcoin’s relative illiquidity could support international trade transactions of that magnitude.

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