Could BRICS nations be on the verge of adopting Bitcoin? This is the perspective shared by VanEck's head of research.
Bitcoin Mining Among BRICS Nations
Matthew Sigel recently suggested on CNBC that BRICS nations
are showing considerable interest in Bitcoin. According to him, the BRICS
countries now have a combined GDP that surpasses the G7, and several new member
countries, including Argentina, the United Arab Emirates (UAE), and Ethiopia,
are involved in Bitcoin mining with government support.
Although Argentina is not officially part of the BRICS, its
national power company YPF has partnered with Genesis Digital Assets from the
U.S. to utilize excess gas from oil fields for Bitcoin mining. Meanwhile, the
UAE’s sovereign fund has collaborated with Marathon Digital Holdings, managing
around 400 megawatts of mining capacity in Abu Dhabi, which represents roughly
3% of the global Bitcoin hashrate. Ethiopia is also leveraging its abundant
hydropower resources for Bitcoin mining.
As for Russia, Sigel mentioned that the Russian sovereign
wealth fund is investing in infrastructure projects to support artificial
intelligence and Bitcoin, aiming to facilitate international Bitcoin
transactions. Recently, the Russian Parliament passed legislation favorable to
the Bitcoin industry, with Russia’s Kickex CEO Anti Danilevski estimating that
Russia contributes around 17% of the global Bitcoin hashrate. Additionally, the
Russian Central Bank launched an experimental platform for cryptocurrency
transactions in September, potentially to bypass sanctions. Sigel speculates
that Russia may openly endorse Bitcoin if the United States makes a similar
move.
VANECK: Three of the six new members of BRICS - π¦πͺ UAE, π¦π· Argentina and πͺπΉ Ethiopia - are mining Bitcoin with government resources.
— Bitcoin News (@BitcoinNewsCom) October 28, 2024
Russia's Sovereign Wealth Fund is investing in Bitcoin mining throughout BRICS countries with the goal of settling global trade in Bitcoin. pic.twitter.com/Nu7Ws8JI2x
Bitcoin's Role in the U.S. Presidential Election
Bitcoin has emerged as a key topic in the current U.S.
presidential race. The Republican candidate, acknowledging the significant
number of Bitcoin investors among voters, has embraced Bitcoin. Should he win
on November 5, Donald Trump has pledged to create a “strategic reserve of
bitcoins,” while also committing not to sell the government’s current holdings
of 200,000 bitcoins from legal seizures.
Furthermore, Republican senators are working on legislation
that would create a national Bitcoin reserve of one million bitcoins. A
Republican win could encourage other nations to consider Bitcoin as a global
reserve currency, especially given its finite supply, which differentiates it
from gold. Unlike gold, Bitcoin’s supply is progressively limited, with mining
difficulty increasing every few years.
Bitcoin’s decentralized nature positions it as a viable
medium for international transactions. As Marathon’s CEO emphasized during a
recent Dubai conference, Bitcoin’s strategic value as a reserve asset is
gaining recognition, as governments anticipate a rise in Bitcoin’s share of
global transactions.
MARA CEO: The πΊπΈ US must “ensure that they have a large amount of BTC such that they can potentially either protect themselves in the event there's a huge movement off the dollar so they can still trade but also so they can project power using BTC.”
pic.twitter.com/7e65Sidxs6
The Decline of the Dollar’s Effectiveness
BRICS countries are increasingly looking to move away from
the dollar, especially since two of its members, Russia and Iran, have been
removed from the SWIFT network, with over 300 billion euros and dollars of
Russian assets frozen. Several BRICS countries already conduct trade in their
national currencies and use their versions of SWIFT (CIPS in China and SPFS in
Russia). However, limitations remain, as seen when Russia refused Indian rupees
for oil payments due to the rupee's poor stability and lack of demand in the
Russian market.
Ultimately, BRICS will need a universally accepted store of
value to balance trade surpluses and deficits. Gold once filled this role
before the Bretton Woods system ended in 1971, but practical issues make it
less suitable for modern commerce. Bitcoin, on the other hand, enables fast,
low-cost transactions and is always accessible, offering a digital alternative
to gold. If the U.S. takes the first step in accumulating Bitcoin, it could
pave the way for a neutral international monetary system with Bitcoin as a
primary, untouchable store of value—reminiscent of the Gold Standard era where
international trade was on equal footing.
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