Russia threatens crypto mining ban
Amid a rough start to the year, cryptocurrencies continued to tumble Friday as Russia announced a proposal to ban mining in the country, the latest crypto bastion to attempt a crackdown. China has previously announced anti-crypto measures.
“The news about Russia potentially banning crypto mining is significant considering Russia’s crypto trading volume last year was reportedly $5 billion, and a ban will heavily impact this,” Marcus Sotiriou, analyst at digital asset broker GlobalBlock, told Yahoo Finance. “I do not think they will be able to completely stop crypto trading activity in Russia though. We have seen China attempt to ban crypto trading multiple times over the past few years, yet China remains one of the most active countries for crypto – decentralized finance which is enabled by cryptocurrencies is hard to monitor/stop.”
Bitcoin lost 10% of its value Friday morning, falling to just above $38,000. Ether, the second-most popular cryptocurrency, fell 12% to just above $2,800. Bitcoin was trading around $69,000 at its November peak. Cardano, Terra, and Solana also all fell by double digits amid a global selloff.
Cryptocurrency has been marketed as a good investment to hedge against inflation brought on by pandemic stimulus measures, and the Federal Reserve’s move to raise interest rates and wean off bond purchases that signal an end to those measures is dropping the value of cryptocurrencies.
Bitcoin is down 15% in January, with Ether dropping about 20% during the same period.
Unrest in Russia’s neighbor Kazakhstan has affected cryptocurrency values, as the country is also a large mining site. India, running neck-and-neck with China for the title of world’s most populous country, has also proposed measures to regulate crypto mining and trading.
Still, Goldman Sachs is optimistic about the medium-term value of cryptocurrency, predicting this month that Bitcoin will hit $100,000 in the next five years as it gains market share.