Emerging economies in the BRICS alliance—Brazil, Russia, India, China, and South Africa—alongside recent additions like Argentina, the United Arab Emirates (UAE), and Ethiopia, are reportedly leaning towards adopting Bitcoin as a tool for international trade.
According to experts, this move could mark a major shift in global financial dynamics, potentially reducing dependence on the U.S. dollar and promoting greater financial independence for these countries.
Matthew Sigel, Head of Digital Assets Research at investment firm VanEck, recently shared insights into this significant development on CNBC’s “Squawk Box.”
Sigel explained that the BRICS countries, especially the newer members, are increasingly turning to Bitcoin as a hedge against financial instability. He stated:
“Of the six new [BRICS] members, three of them—Argentina, UAE, and Ethiopia—are mining Bitcoin with government resources. So there is tremendous urgency outside of the US to find a way to circumvent the irresponsible fiscal policy that we’ve been running here in the US.”
Sigel said that bitcoin can become a global reserve asset by 2050, projecting that its price could reach $3 million per coin. This would represent a 16% annual growth rate over several decades, which Sigel considers achievable.
He highlighted Russia’s recent investment in bitcoin mining and AI infrastructure across BRICS nations as a promising step toward enabling global trade in Bitcoin.
Sigel also noted that bitcoin’s price has doubled over the past year, with recent gains from $57,000 to nearly $70,000 potentially tied to former President Trump’s rising odds in betting markets, as Trump is seen as a pro-Bitcoin candidate.
He suggests a similar Bitcoin rally could happen around the upcoming election, as it did in 2020.
Sigel believes that for countries like Argentina, UAE, and Ethiopia, bitcoin mining is more than just a tech trend; it’s a strategic tool for economic resilience.
By mining bitcoin domestically, these countries hope to create additional sources of revenue and, perhaps more importantly, establish alternatives to the U.S. dollar in international trade.
This shift is part of a broader strategy among emerging economies to reduce their reliance on the dollar, which has long been the dominant currency in global trade.
Bitcoin mining, a process where computers solve complex puzzles to verify transactions and add new blocks to the Bitcoin blockchain, requires significant computing power and energy.
But for countries like Argentina and Ethiopia, the potential payoff makes it worthwhile. Through these ventures, they aim to gain a bit more financial independence, explaining why these countries are investing in government-backed bitcoin mining.
Russia, a major BRICS nation, is taking a leading role in bitcoin mining, with plans to expand its mining infrastructure and use bitcoin in international trade.
The country’s largest data center operator, BitRiver, recently partnered with Russia’s sovereign wealth fund, the Russian Direct Investment Fund (RDIF), to develop facilities that will support both bitcoin mining and artificial intelligence projects.
Igor Runets, CEO of BitRiver, highlighted the importance of this move, saying:
“We will focus on creating a mining-based infrastructure—building data centers and connecting them to necessary power sources to enable AI project deployment and development across the country.”
Kirill Dmitriev, CEO of RDIF, echoed these sentiments, stating, “The development of computing capacity for the implementation of artificial intelligence in various industries is a priority for Russia and the BRICS alliance partners.”
Sigel highlighted these developments within BRICS and Russia, stating that Russia’s wealth fund plans to invest in bitcoin mining across BRICS nations. He suggested that the BRICS nations are aiming to use bitcoin for settling international trade.
Sigel speculated that when Putin eventually exits power, reintegrating Russia and similar economies into the global financial system might mean dealing with bitcoin as a primary trading currency.
With this infrastructure in place, Russia hopes to use bitcoin as a tool to navigate the challenges imposed by Western sanctions.
These sanctions have restricted Russia’s access to traditional financial systems, delaying cross-border transactions and complicating international trade. Now, Bitcoin presents a possible solution, offering an alternative system for trade settlement that isn’t as vulnerable to Western influence.
For decades, the U.S. dollar has been the world’s reserve currency, underpinning global trade and serving as a safe haven during times of economic uncertainty. However, countries outside the U.S. are increasingly concerned about the country’s fiscal policy, especially in light of rising national debt and inflation.
Sigel also projected bitcoin’s price could reach $100,000 or even $200,000, citing past rally percentages and suggesting a potential 1,000% increase to around $180,000. He also predicted that the U.S. election and growing debt concerns could act as catalysts for bitcoin’s rise.
Sigel pointed out that a potential downgrade of U.S. sovereign debt, which may occur after the 2024 presidential election, could serve as a catalyst for bitcoin’s growing role in global finance.
“We think once the election result is finalized, Moody’s is going to downgrade U.S. sovereign debt, and that could be a catalyst for Bitcoin,” he suggested, adding that Bitcoin’s unique characteristics make it a valuable asset in this context.
“Bitcoin is a chameleon. It’s hard to predict what it’s correlated with. Because of the 21 million and fixed amount out there, it’s a non-US asset.” Sigel said.
Countries like Argentina, UAE, and Ethiopia are also turning to Bitcoin as a hedge against the volatility and inflation in their own economies.
Sigel’s view aligns with a broader belief that, should the dollar lose some of its global influence, Bitcoin could step in as an international reserve asset, providing nations with a currency that operates independently of any single government’s fiscal policy.
VanEck has developed a long-term model that predicts bitcoin’s value could reach as high as $3 million by 2050.
This ambitious forecast is based on the assumption that bitcoin will eventually be used as a reserve asset held by global central banks. “If Bitcoin reached a modest 2% weight in global central bank reserves, our model projects a price of around $3 million per Bitcoin,” said Sigel.
The model suggests that, as more countries adopt bitcoin for trade and as a financial reserve, demand for the digital currency could drive its price to unprecedented levels.
While some may view this projection as speculative, it reflects growing interest from nations worldwide in adopting bitcoin as a stable, non-government-controlled asset.
The growing interest in Bitcoin among BRICS nations signals a broader shift in how countries approach international trade and finance.
Countries like Russia and the new BRICS members—Argentina, UAE, and Ethiopia—are looking beyond the traditional dollar-centric system to explore bitcoin as an alternative.
In a world where financial independence is becoming increasingly important, Bitcoin offers these countries an option that promises greater autonomy and resilience.
While the adoption of Bitcoin by BRICS nations is still in its early stages, the potential for change is substantial. As Sigel remarked, “Someday, I don’t know if it’s five years or ten years… [some BRICS nations] are trading in Bitcoin—what are we doing?”
For these nations, Bitcoin offers a way to shake up the current financial landscape, paving the way for a new era in international trade that may redefine the role of the U.S. dollar in the global economy.
