The role of Bitcoin in the BRICS countries' expansion plans

The BRICS countries are currently meeting at a summit in Kazan, Russia, to discuss their strategic direction. The handling and use of cryptocurrencies is likely to be one of the topics. The nine member states include Brazil, Russia, India, China and South Africa as well as Egypt, Ethiopia, Iran and the United Arab Emirates. They make up 45% of the world's population and are responsible for 35% of global economic output and 50% of global CO₂ emissions.

The BRICS Economic Forum took place in Moscow on October 18. Russian President Vladimir Putin announced the decision that Bitcoin and other cryptocurrencies are officially recognized for investment in the BRICS countries.

In addition, the largest Russian mining company BitRiver announced expansion plans in the BRICS countries, which it is carrying out together with the Russian sovereign wealth fund, the Russian Direct Investment Fund (RDIF).

Russia has opened up to Bitcoin and cryptocurrencies this year and has actively worked to create a corresponding legal framework. Blocktrainer.de reported on how the country legalized the use of cryptocurrencies for international trade at the end of July and beginning of August and created regulations for the mining of Bitcoin and Co. In addition, at least two Russian crypto exchanges are planned to facilitate conversion into the rouble. The Russian central bank is also testing the digital rouble, which is expected to be fully introduced in 2025. The aim of these measures is to better position Russia in the crypto sector and to circumvent foreign sanctions.

At the BRICS Economic Forum in Moscow, Putin called for a similar commitment from the BRICS states in order to pave the way for a new economic policy that is independent of traditional financial systems. In addition to the introduction of digital currencies, the BRICS states also want to establish the blockchain-based BRICS Pay platform, which is intended to facilitate cross-border transactions within the group of states.

This should not only expand the economic presence of the BRICS bloc, but also promote local currencies and reduce dependence on Western financial systems and the US dollar.

The circumvention of sanctions also plays an important role - especially for Russia. According to media reports, leading lawmakers have already suggested that Russian miners could sell their mined Bitcoin and other tokens to international buyers so that these buyers could then use the cryptocurrencies to pay for imports, ultimately circumventing sanctions.

In this context, it is extremely fitting that the largest Russian mining company BitRiver and the Russian Direct Investment Fund (RDIF) also announced their joint expansion plans at the BRICS Economic Forum. They want to set up data centers in the allied BRICS countries for mining Bitcoin and other cryptocurrencies as well as for artificial intelligence (AI) in order to meet the high demand, increase the Russian share of global data processing and position themselves better globally.

BitRiver already operates 21 data centers in Russia and is currently building ten more. The CEO of BitRiver, Igor Runets, is convinced that the Russian mining industry has an advantage over the competition from the USA and could gain further market share. However, the mining company is also on the sanctions list of the US Office of Foreign Assets Control (OFAC).

The mining law passed in Russia at the beginning of August also gives the government a large degree of control over the mining company. It also gives Russia access to decentralized liquidity for international payments and to circumvent sanctions.

The cooperation with the state fund RDIF, which also leads the BRICS Economic Council's working group on financial services and investment and is committed to creating a joint investment platform, now represents the next phase of expansion not only for BitRiver, but also for Russia itself. The country is supporting BitRiver with a lot of money and sees mining as an important driver of its own economic growth. In addition, the Russian miners are to receive surplus energy, explained the Ministry of Energy. At the same time, Russia's AI projects and the corresponding professional opportunities are also to be promoted. The development of its own computer infrastructure would continuously reduce its dependence on the West.

Together with the Russian Direct Investment Fund, we will focus on creating an infrastructure base based on mining. We will build data centers and connect them with the appropriate capacities. This will eventually allow us to deploy and implement AI projects.
Igor_{Runets, CEO of BitRiver, in an interview}

Mining is not only the basis for the digital economy. When Russia catches up with the US in an area as fundamental as mining, it means that our country cannot be ignored.
Igor_{Runets; CEO of BitRiver, in an interview}

The expansion of the Russian mining industry into the markets of the BRICS nations also offers new opportunities for the countries themselves. Although no concrete agreements have yet been made, the aim is to promote AI and mining in the BRICS countries and increase the joint gross domestic product by 1.2 percent or 370 billion US dollars per year. In addition to economic growth, this would also increase the liquidity of cross-border payments between the member states and reduce dependence on the West.

The development of computing power for the implementation of AI remains a priority for Russia and the BRICS partners. Sharing high-tech infrastructures will allow members to cut costs, reduce dependence on foreign technologies and control important data.
_{Kirill Dmitriev, CEO of RDIF, in an interview}

The partnership between BitRiver and the RDIF and the increasing acceptance of blockchain technology, Bitcoin and co. by the BRICS countries represents a further step in their fight against the global dominance of the USA. They are striving to create a self-sufficient, future-proof and technologically advanced ecosystem that is independent of the West in many areas and is increasingly outstripping it.

At the same time, the increasing acceptance and use of Bitcoin mining by the BRICS nations is a good sign for the global adoption of Bitcoin. More participants will join the network and recognize the benefits of Bitcoin's financial inclusion and monetary properties over fiat currencies. However, it remains to be seen whether the use of Bitcoin will go beyond circumventing sanctions and to what extent the BRICS states will allow their citizens to be financially independent or want to exercise control themselves with their digital central bank currencies. 

However, additional mining facilities will not only increase the overall computing power (hashrate) of the network, which regularly records new highs, but will also increase it further. This will ultimately also increase the security of the network. And alongside Russia, China is also very active in Bitcoin mining, meaning that the BRICS countries' share of the hashrate could rise continuously.