The BRICS economic alliance, comprised of Brazil, Russia, India, China, and South Africa, is grappling with a double-edged sword: cryptocurrency. While BRICS members see digital assets as a potential path towards a new reserve currency independent of the US dollar, concerns are mounting over the energy consumption of cryptocurrency mining.
Russia, a key player in BRICS, has emerged as a vocal advocate for regulation in the crypto mining space. President Vladimir Putin recently warned about the potential for blackouts due to the surging energy demands of miners. Russia estimates crypto mining currently devours 1.5% of its total electricity consumption, and with no regulations in place, this figure is expected to rise further.
This isn’t the first time Russia has expressed reservations about crypto. In 2020, the country legalized cryptocurrencies as financial assets but prohibited their use for transactions. However, cheap electricity and access to mining equipment have made Russia a haven for miners, pushing it to become the second-largest crypto mining nation behind the US.
The BRICS dilemma highlights the complex relationship between cryptocurrencies and energy use. While some countries like China have cracked down on mining due to environmental concerns, others see it as a potential economic driver.
Also Read: BRICS Boom: All 54 African Nations Eye Membership In $21 Trillion Alliance
BRICS’ desire to leverage crypto for a new reserve currency necessitates navigating this tightrope walk. They aim to regulate mining to ensure energy security but also foster innovation in the digital asset space.
The path forward for BRICS remains unclear. Will they implement policies mimicking China’s restrictive approach, or can they develop a framework that balances growth with responsible energy consumption? The answer will have significant implications for the future of cryptocurrency within the BRICS bloc and potentially, the global financial landscape.
Disclaimer: The information in this article is for general purposes only and does not constitute financial advice. The author’s views are personal and may not reflect the views of Chain Affairs. Before making any investment decisions, you should always conduct your own research. Chain Affairs is not responsible for any financial losses.
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