Russia Will Buy $10 Billion in Bitcoin, Ditch US Dollar and Become Huge Crypto Whale: Russian Economist

According to a new claim from a Russian economist, the world’s 12th largest economy is about to pour $10 billion into Bitcoin.

Vladislav Ginko, a lecturer at Moscow’s Russian Presidential Academy of National Economy and Public Administration, says US sanctions are forcing Russia to diversify.

 Ginko told the Australian crypto outlet Micky that at this point, he believes Russia has no other option.

“US sanctions may be mitigated only through Bitcoin use. Because of US sanctions, Russia’s elite is forced to dump US assets and US dollars and invest hugely into Bitcoins. The Central Bank of Russia sits on $466 billion of reserves and has to diversify in case there is limited opportunities to do it.”

A new report from Forbes highlights the impact that US sanctions are having on Russia.

“Sanctions and isolation are having an impact on the Russian economy. Although Russia is not a big exporter to the U.S., canceled energy and defense contracts in Europe coupled with bans on financing Russia’s key lenders have had an impact on the economy. What else can explain the lackluster growth story in the country since 2014? Even higher oil prices have done little to lift the Russian economy.”

In July, the state-sponsored Russian news outlet RT said President Vladimir Putin gave a speech highlighting the need for alternative reserve currencies in global trade.

“Regarding our American partners placing limitations, including those on dollar transactions, I believe is a big strategic mistake. By doing so, they are undermining the trust in the dollar as a reserve currency.”

At that time, Putin said Russia has no plans to stop using the US dollar unless it is prevented from doing so.

In Venezuela, President Nicolas Maduro announced that the country’s newly created digital asset, the Petro, is an official government currency. The Petro is supposedly backed by the country’s oil reserves. After its launch, US President Donald Trump prohibited Americans from investing in it, claiming it was designed to avoid US sanctions.


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Author: Daily Hodl Staff
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Cheap Power Is Luring Battered Bitcoin Miners to Iran

While some bitcoin miners are estimated to have shut down hundreds of thousands of machines – if not more – others are still out there looking for alternative ways to keep operating.

And it’s Iran, with its extremely low-cost electricity (that can go as low as $0.006 per kilowatt-hour) that’s luring overseas miners. But as attractive as it appears, the journey to setting up shop in Iran isn’t turning out to be a simple one.

Bitcoin mining is, in effect, a kind of energy arbitrage. Miners make their money when the cost of producing coins – currently 12.5 bitcoins per transaction block, plus any fees they’ve accrued – is lower than the operation of the mine itself, including electricity.

Nima Dehqan, a blockchain researcher at a Tehran-based crypto startup Areatak, told CoinDesk that the firm has been meeting with foreign investors that are looking to attempt just that by mining in Iran.

“We have had investors visiting our farms from Spain, Ukraine, Armenia, France,” he said.

Dehqan added that his firm has signed a deal with investors in Spain to set up local mines, a process that will consist of three phases.

“First is sort of a just-to-make-sure testing phase, which is already in place. Second is building new infrastructures together, which somehow has already started, too. And the third will be gathering more investors from outside of Iran,” he explained.

Dehqan said investors are attracted the cheap electricity, which, depending on the actual source of power, can usually go well below $0.01 per kilowatt-hour. And his firm can run facilities at different scales, from two-to-three-megawatts small farms, to higher amounts like 10 – 20 megawatts.

He said while the electricity cost in Iran has always been relatively low, the recent significant devaluation of the Iranian rial – partially due to the recent sanctions by the U.S. government – has made the opportunities even more appealing.

Secret shift

There’s even evidence to suggest miners in countries commonly seen as bitcoin mining powerhouses – China in particular – are looking at Iran for potential opportunities.

Compared to the numbers cited by Dehqan, electricity provided by hydropower stations in China’s southwestern region usually costs around 0.15 yuan – or about $0.02 per kilowatt-hour – in the summer when water is abundant. When winter comes, the cost could go up to $0.04 per kilowatt-hour.

It appears that some Chinese miners have already made the move. A startup based in Chengdu, China, told CoinDesk under the condition of anonymity for fear of government reprisal that it has already deployed 2,000 miners in Iran.

“Iran has vast natural gas resources and thus the electricity cost can be as low as 0.04 yuan [$0.006] per kilowatt-hour. But Iran doesn’t really have any firm making miners. Now that secondhand miners are being sold cheaply in China, it’s a rather reasonable business decision. With electricity that cheap, you can generate profits in one to two months,” the company said in a statement.

Javad Sedighi, a self-employed cryptocurrency miner in Iran, echoed that point, telling CoinDesk that local miners largely rely on the import of machines to the country.

“[That’s] because there are no companies, like Bitmain, [shipping equipment] to Iran. In the past few months, there have been intermediary companies [being] established in Iran that carry out the import of the machines,” Sedighi said, adding:

“I think this is done by people who have a lot of power and money. And it’s done secretly.”

That kind of potential – particularly for very cheap power – has even caught the attention of notable Chinese bitcoin millionaires like Chandler Hongcai Guo. On Oct. 26, Guo posted a video on his Weibo account, telling a group of audience that there’s a huge opportunity in Iran where electricity cost can go well below $0.01 kilowatt-hour.

“It’s suitable for hosting secondhand miners that are on the edge of shutting down in China and can make profits in one to two months,” he was recorded as saying, and asked interested miners to visit Iran to do their own due diligence.

No simple paths to entry

But in conversation with CoinDesk, Dehqan sought to temper the idea that miners are rushing into Iran en-masse since the methods by which foreign investors can set up mining facilities are anything but simple.

The Chinese miner that has set up 2,000 machines said one major hurdle for outsiders is to get miners inside the country to begin with, let alone establishing partnerships with local farms.

The company explained that, currently, the Islamic Revolutionary Guard Corps – a branch of the country’s military – still has significant sway on the border. Simply put, they have the power to decide which shipments come in and which ones do not.

“There’s the risk of miners being detained and confiscated at the border. While some logistic companies may have an insurance policy to cover the loss but you can only get compensated by fiat and miners will be gone,” the firm said, adding:

“It’s still very risky. Even though we also try to act as an agent to help other miners go overseas, many of them remain hesitant.”

Dehqan echoed that point and added it’s not so easy to import miners into Iran and some special shipping procedures are necessary.

Sanction complications

And it’s not just internal pressures like border security that are proving to be barriers to would-be investors. Indeed, there’s one particular figure – U.S. President Donald Trump – who has thrown some wrenches into the proverbial gears.

As it stands, current U.S. sanctions have further deterred potential investors that have ties to the world’s largest economy. Guo, who owns a mansion in California, told CoinDesk via WeChat that while he agrees the opportunity is very attractive now that the bitcoin mining difficulty and the overall network hash rate have both dropped significantly, investors like him would not dare to become involved.

“I didn’t go visit myself, considering that the U.S. has imposed the economic sanctions on Iran,” he said, alluding to recent news that the chief financial officer of Huawei was arrested in Canada for alleged involvement in sanctions fraud.

“Most of the mining giants in China, or miner makers, do not dare to host their machines in Iran. This is the general situation. As attractive as the electricity over there might be, only miners at an individual or much smaller scale are shifting to Iran. Most people are still hesitant.” Guo said.

On Aug. 6, the Trump administration announced it would re-impose sanctions on Iran starting from Aug. 7 after withdrawing from a nuclear agreement the U.S. government first entered in 2015. However, the European Union, Russia and China have been reportedly seeking to uphold the agreement to allow businesses and financial transactions to continue with Iran.

According to Sedighi, cryptocurrency mining in Iran itself is still a legal grey area, which means that it’s neither entirely legal or illegal.

“The rules of the mining industry in Iran have not been approved by Parliament. But it is in hand,” he said. “In Iran, like the rest of the industry, you do not have a license to operate. For example, you can not get a bank loan.”

To that effect, Sedighi said the local crypto community is working together to push Iranian lawmakers to pass a formal law that would protect the mining industry, thus enabling it to attract capital and grow.

“We believe that political disagreements between governments should not harm the people,” he said, concluding:

“There have been very much talks about sanctions, as well as methods that should be used by the Iranian crypto society to avoid harming sanctions.”


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Author: Olfie Zhao
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Crimea Considers Blockchain Center for Anonymous Foreign Investments to Avoid Sanctions

Crimean authorities are considering creating a blockchain-cluster that would support investment platforms allowing foreign investors to work in sanctioned countries anonymously, major state-operated Russian news agency TASS reported Nov. 16.

Previously this week, the Permanent Representative of the Republic of Crimea under the President of the Russian Federation, Georgy Muradov, had already revealed the Crimean government’s potential plans to create a separate blockchain-cluster in the region for venture capitalists funds.

Today, Roman Kulachenko, the President of the Crimean Republican Association of Blockchain Technologies Investment, said that a new international education center for working with blockchain technologies as a way of avoiding sanctions might be opened on the Crimean peninsula.

According to Kulachenko, this educational center would allow for the training of specialists from different countries under sanctions in blockchain technology. He added:

“There are a number of states that, like the Crimea, that are under sanctions — for example, South Ossetia and Abkhazia. We have the same problems. And the center will allow us to combine efforts and solve the problem.”

Back in September, North Korea was reported as using cryptocurrencies to avoid sanctions imposed by the U.S., despite current restrictions imposed on fiat assets.


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Author: Max Yakubowski
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North Korea is Using Cryptocurrency to Evade U.S. Sanctions: Experts

Two Washington-based financial experts say that North Korea is increasingly using cryptocurrency to evade U.S. Sanctions.

According to Lourdes Miranda, a financial crimes investigator specialized in intelligence collection and analysis, and Ross Delston, an expert witness who specializes in anti-money laundering and combating the financing of terrorism, Pyongyang is creating its own cryptocurrency and is likely also using popular cryptocurrencies like bitcoin.

Cryptocurrencies are being preferred by international criminals and for terrorist financing, and the country of North Korea is no exception, the duo said in a written statement to Asia Times. They said:

“Crypto-currencies have the added advantage to the DPRK of giving them more ways to circumvent US sanctions.”

They added, “They can do so by using multiple international exchangers, mixing and shifting services – mirroring the money laundering cycle – to exploit international financial institutions that have correspondent banking relationships with the United States.”

According to Priscilla Moriuchi, a former NSA cybersecurity official, North Korea is earning around $15 million to $200 million by mining and selling cryptocurrencies. Speaking to The Hill earlier this year, Moriuchi said:

“North Korea has pursued other avenues for obtaining cryptocurrencies as well, including mining of both bitcoin and Monero, ransom paid in bitcoin from the global WannaCry attack in May and even commissioning a cryptocurrency class for North Korean students in November.”

Source: Shutterstock

Now, per the Asia Times report, Miranda and Delston stated that North Korea could use the most popular cryptocurrencies like bitcoin, or the country’s government could create its own.

“Having their own crypto-currency would also facilitate their ability to open online accounts under the guise of a non-adversarial nation using anonymous communication to conceal the user’s locations and usage on the internet,” they stated.

The researchers also said that the country would create its own blockchain in order to alter their public record of transactions to show that these transactions are coming from legitimate sources. Further, the country would create its own cryptocurrency wallet services.

Explaining about the making of successful exchange of crypto into fiat currencies — all the while undetected — the pair said that North Korean-mined cryptocurrencies would be laundered onto European exchanges, enabling the rogue nation to obtain USD “with none of those pesky sanctions attached.” The investigators are not sure about the current scale of North Korea’s crypto-currency operation.

As CCN reported, America’s rivals including Iran, North Korea, Russia, and Venezuela have recently turned to cryptocurrencies in order to counter economic pressure from the U.S. and its allies.

For example, the petro, an oil-backed cryptocurrency announced by Venezuela’s president, Nicolas Maduro, was banned in the United States. Earlier in May, President Trump issued an executive order banning American citizens from buying, trading, or dealing with the petro cryptocurrency “in light of recent actions taken by the Maduro regime to attempt to circumvent U.S. sanctions by issuing a digital currency.”

Also, Iran has recently revealed the details of its national cryptocurrency in response to U.S.-led economic sanctions. Iran’s future cryptocurrency is allegedly backed by the fiat Rial and is developed on the Linux Foundation-led open-source Hyperledger Fabric technology, the report said.


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Author: Sujha Sundararajan 
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US gets out the sanctions howitzer

 

Last November, Russian energy and metals company EN+ raised eyebrows when it listed shares on the London stock exchange.

This was a close associate of Vladimir Putin raising money by selling shares in London to pay off a loan to a sanctioned Russian bank.

Although perfectly legal and compliant with sanctions imposed after the annexation of Crimea, it seemed to run rings around the intention of the restrictions. Proof to many observers they were tokenistic and ineffectual.

In the last few days, the peashooter has been discarded in favour of a howitzer.
The US decision to place Oleg Deripaska and his entire business empire on the list of sanctioned individuals and organisations has seen Rusal – a company that makes 6% of the world’s aluminium – halve in value yesterday and lose another 9% today.

Rusal has said it may default on some of its loan agreements and the Russian government is scrambling to find ways to offer it financial support.
Investors who supported that controversial listing in London of Deripaska-controlled EN+ are nursing losses of more than 30%.

The aversion to all things Russian has hit the blue-chip FTSE 100 index.

Chelsea owner Roman Abramovich is not on the list, nor is Evraz – the steel company he controls. Nevertheless, shares fell more than 20% on Friday and Monday before staging a modest comeback.

Another FTSE 100 member – commodity trading giant Glencore – is Rusal’s biggest customer and owns nearly 9% of EN+. It saw its shares fall nearly 8% since Friday before regaining half of those losses.

Perhaps the UK’s biggest interest in Russia is BP’s 20% stake in oil giant Rosneft. BP books one-third of its total oil production in Russia and BP boss Bob Dudley sits on a board chaired by Igor Sechin – a close Putin ally and sanctioned person since the invasion of Crimea in 2014.

Company insiders say the latest round of sanctions don’t change much for them: “It isn’t illegal to do business in Russia – we keep a close eye on the sanctions and make sure we comply with them.”

So far, investors’ Russian jitters haven’t hit the value of the UK’s third-biggest company, a staple of almost all UK pension funds.

Collateral damage

As I’ve said before, it has been possible to find a way through the web of sanctions, but that web is reaching further into the global economy.

As the gloves come off, will manufacturers of cars and planes, for example, think twice before sourcing steel and aluminium from Russian companies?

Commodity markets suggest supplies could be tight, with the price of aluminium seeing its biggest one-day rise for five years yesterday on very heavy volumes of trading.

Coming on top of new US tariffs on steel imports, that will begin to feed through to prices for finished goods hitting companies and consumers around the world.

Turns out it’s hard to use a howitzer without causing significant collateral damage.


 

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Author Simon Jack 

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