Following the invasion of Russia on Ukraine, the country has been faced with strict sanctions being pelted at them by Western countries. These sanctions have kept Russia’s economy in shambles as the country now finds itself increasingly isolated from global trade. Despite being one of the largest exporters of gas, accounting for about 45% of the European Union’s imports, the country has been facing difficulty in finding buyers for its oil.
According to information gotten, due to the difficulty Russia is facing with selling its oil, the country is now considering accepting Bitcoin as a means of payment for its oil and gas exports. According to Russia’s chair of the Duma committee on energy, Pavel Zavalny, he disclosed that when it comes to their allies such as China or Turkey, Russia is willing to be more flexible with payment options as alternative ways to pay for Russia’s energy exports and also accept Bitcoin as a means of payment. After Russia made the statement of accepting Bitcoin as a means of payment, there was a rise in Bitcoin of about 4%, which saw the price move up to $44,000.
Not only did Bitcoin rise, but the price of other cryptocurrencies also spiked around that time. The president of Russia Vladimir Putin disclosed earlier that he would require “unfriendly” countries to pay for oil and gas in rubles. Although his demand was frowned at by European leaders, especially those who are still purchasing the Russian oil and gas stating that such a requirement would breach existing contracts, which typically specify the currency should be in Euros or Dollars.
Tekedia Mini-MBA edition 16 (Feb 10 – May 3, 2025) opens registrations; register today for early bird discounts.
Tekedia AI in Business Masterclass opens registrations here.
Join Tekedia Capital Syndicate and invest in Africa’s finest startups here.
When sanctions were being pelted out at Russia by the Western countries, for their forceful invasion of Ukraine, I pondered if Russia could survive all of it. I also imagined if they could thrive as a pariah state, knowing full well that most European countries have cut ties with them. Well, I guess they are gradually feeling the heat, which is why they are seeking alternative payment options to the purchase of their oil and gas. Each of these sanctions bears a weight of devastating impact on its economy. Recall that President Joe Biden and the European Union earlier announced the expulsion of Russian banks from the society for worldwide interbank financial telecommunication.
The expulsion ensured that Russian banks were disconnected from the International Financial system as well as harmed their ability to operate globally. Russia’s switch to payment through Bitcoin would be a strategic move deployed by them to bypass sanctions since cryptocurrency doesn’t flow through the International banking system. Although this alternative route might look like they have found a solution, albeit it is complicated due to how volatile cryptocurrency can be.
With its value swinging by 50 percent or more over the past year, it could be favorable to Kremlin, yet it may further undermine Russia’s economy. This period seems to be an unfavorable one for Russia because despite considering accepting Bitcoin as a means of payment, one of its strong allies and trade partners China, has for long banned the use of cryptocurrency in their country. Another challenge that potential buyers of Russia’s oil and gas might likely face after purchasing the oil, would be how to get it out from Russia. One of the constraints would be getting a ship to carry the barrels of oil from Russia as not many shipowners will be willing to take the risk to avoid their ship from getting impounded.
