China,Russia Use Bitcoin for Energy Transactions Amid Trade Tensions

China and Russia have reportedly started settling certain energy transactions using Bitcoin, as confirmed by investment firm VanEck. This move signifies a departure from the traditional U.S. dollar-dominated financial system, especially amidst escalating global trade tensions. Matthew Sigel, VanEck’s Head of Digital Assets Research, highlighted that the adoption of Bitcoin for trade settlement is no longer just a theoretical concept but a practical application.

Sigel noted that China and Russia have begun using Bitcoin and other digital assets to settle some energy transactions. This development is part of a broader trend where digital assets are increasingly being utilized in practical, cross-border commerce, particularly in the energy sector. For countries facing restrictions in traditional financial channels, Bitcoin offers a neutral and decentralized payment mechanism, which can be particularly advantageous in the current geopolitical climate.

The shift towards using Bitcoin for energy trades is driven by the need to mitigate risks associated with economic sanctions and trade weaponization. This strategy allows China and Russia to bypass the U.S. dollar-dominated financial system, providing a more stable and neutral settlement mechanism. The use of Bitcoin in these transactions is not an isolated incident; Russia has already been employing cryptocurrencies like Bitcoin and stablecoins for oil trade with China and India to evade Western sanctions.

Other nations are also exploring the use of digital assets for energy transactions. For example, Bolivia has announced plans to import power using cryptocurrency, while the French utility EDF is considering Bitcoin mining to monetize surplus electricity. These developments underscore the transition of digital assets from speculative instruments to practical tools for energy trade, challenging the supremacy of the U.S. dollar in global commerce.

The shift towards Bitcoin for settlement purposes supports its position as a safe-haven asset during economic crises. As geopolitical tensions continue to rise, more countries may follow China and Russia’s lead, further strengthening Bitcoin’s status as a strategic financial tool. This trend could lead to a more multipolar financial system, where digital assets play a crucial role in international trade and commerce. The dovish signals from the U.S. Federal Reserve have historically supported Bitcoin prices, adding further interest from international players seeking alternative reserves and settlement tools.