As a seasoned analyst with over two decades of experience navigating global financial markets, I find the potential adoption of Bitcoin by BRICS nations to be an intriguing development. The expansion of the BRICS bloc and their increased GDP surpassing that of the G7 nations signifies a significant shift in global economic dynamics.
On CNBC’s “Squawk Box,” Matthew Sigel, the Head of Digital Assets Research at investment firm VanEck, predicted a major change in international trade patterns due to the possible integration of Bitcoin by BRICS countries. Sigel’s comments are relevant as there are escalating fiscal policy issues in the U.S. and intensifying attempts by developing economies to bypass conventional financial structures.
According to Sigel, if the election outcome becomes clear, Moody’s may lower the U.S. government debt rating. This could potentially trigger Bitcoin, he suggested. He highlighted Bitcoin’s distinctive traits, stating that due to its limited supply of 21 million units, it is not directly tied to the U.S. economy, making it hard to predict what factors might influence it.
BRICS Will Adopt Bitcoin: VanEck
The grouping known as BRICS (consisting of Brazil, Russia, India, China, and South Africa) has grown by five new members: Egypt, Ethiopia, Iran, Saudi Arabia, and the United Arab Emirates (UAE). This enlargement means that the combined economic output of this expanded bloc now exceeds that of the G7 countries.
As a researcher, I recently attended the BRICS conference held in Russia. Notably, six new members have been added to this group, resulting in their collective GDP surpassing that of the combined GDP of the G7, as Sigel pointed out. Among these newcomers, Argentina, UAE, and Ethiopia are harnessing their government resources for Bitcoin mining. This trend outside the US indicates a growing urgency to develop strategies that bypass the fiscal policies within our borders.
Russia is making solid moves to strengthen its Bitcoin mining infrastructure. The nation’s leading data center operator, BitRiver, has joined forces with the Russian Direct Investment Fund (RDIF) to build cryptocurrency mining and artificial intelligence processing centers in BRICS countries. This partnership was revealed at the BRICS Business Forum in Moscow on October 18, 2024.
According to BitRiver CEO Igor Runets, our primary goal is to establish an AI-centric mining infrastructure. This involves constructing data centers and ensuring they have access to essential energy supplies, so we can roll out and develop AI projects throughout the nation.
Sigel highlighted Russia’s tactical steps, stating that “Russia has disclosed plans for their wealth fund to contribute to a local fund, aimed at establishing Bitcoin mining across the BRICS region. This move seems to be part of a broader strategy to facilitate international trade using Bitcoin.
He implied that potential changes in global politics might result in a wider adoption of Bitcoin for international trade. “Perhaps within five or ten years, Putin will no longer be around. When it comes time to reconnect these nations with the world, if they’re trading using Bitcoin, what are our alternatives?
Kirill Dmitriev, head of RDIF, emphasized the idea of technological self-reliance, stating that strengthening computing power for artificial intelligence applications across multiple sectors is a top priority not only for Russia but also for the BRICS alliance members. By sharing advanced technology infrastructure, member countries can lower costs, minimize reliance on foreign tech, and maintain control over crucial data.
Significantly, Sigel expresses optimism regarding Bitcoin’s future worth. He estimates that its value could reach $100,000 shortly and potentially surge to $200,000. Using a previous rally as reference, which was 2,000%, he predicts that if Bitcoin achieves half of that growth (1,000%), it would be worth around $180,000. Sigel believes that post-election financial changes in the U.S. could act as a powerful trigger for Bitcoin’s increase in value. He suggests that after the election might serve as a major catalyst. This idea is already being discussed on the front page of The Wall Street Journal, concerning debt and deficit issues, with Moody’s indicating similar sentiments.
VanEck has created a future-oriented model suggesting Bitcoin could become a global reserve asset by 2050, potentially being utilized for international transactions and held by global central banks at around a 2% level. According to their calculations, this model leads to an estimated value of approximately $3 million per Bitcoin.
At press time, BTC traded at $71,029.
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2024-10-29 12:12