Warning to the West : Russia’s competitive advantage in cryptocurrency mining from exploitable energy surpluses

As the war in Ukraine persists and global responses to Russian aggression continue to be inadequate, it is time Western policy makers, academics, and alike work preemptively to halt Russia’s progress in emerging financial systems that are set to afford them more normative power. This report seeks to use Porter’s Diamond Model of National Competitive Advantage to expose Russia’s competitive advantage in proof-of-work (P.O.W.) cryptocurrency mining and the government’s intent to exploit their war induced energy surpluses for such purposes. Without concerns of multicollinearity or additional biases, the quantitative data would suggest that Russia is the third most favorable country to mine P.O.W. cryptocurrencies, falling just behind Canada and Norway. Subsequent analysis related to the bill currently circulating in the Russian Duma, which will regulate P.O.W. cryptocurrency mining to serve state needs, suggests that the industry could provide multiple millions of dollars in state revenue and release millions of kilograms of CO2 into the atmosphere. The application of the described mixed-methods approach allowed the findings and recommendations to be communicated in a way that supports the existing and emerging literature on Russia’s oil and gas strategy, sanctions evasion and de-dollarization, cryptocurrency policy, and climate impact analysis