May 30, 2025: Since Russia invaded Ukraine three years ago, the retaliation has been staggering for the Russian economy. The sanctions and damage inflicted by Ukrainian drone and missile attacks ravaged many sectors of the economy, especially energy production. As the war progressed Russia encountered growing energy shortages. A major cause of this was increased Bitcoin mining. To create a new Bitcoin requires a lot of computer power and enormous amounts of electricity. Russia partially financed its war in Ukraine via extensive Bitcoin creation, or mining. The energy requirements are so high that Russia has had to limit the use of electricity by industries and even some civilians. Before 2023 Russia exported electricity to China, now it imports it from China and other countries. The energy shortages have diminished oil and natural gas production. While the government promotes and protects Bitcoin mining, it has been unable to control the number of Bitcoin miners or limit their access to the national electrical supply. Bitcoin miners can afford to bribe local officials to leave them alone. The national government has been unable to control this, and the result is a runaway electricity shortage that randomly cripples portions of the economy. Russia has created a monster that it cannot control or destroy. The only thing that will make the Russian Bitcoin miners vulnerable is an end to the Ukraine War.

Bitcoin first appeared fifteen years ago and proceeded to have an enormous impact on national economies and criminal activity. Bitcoin is a cryptocurrency. This currency is based on software, not paper notes and coins. Bitcoin is one of the first and most widely used. There are online markets for buying and selling bitcoins. Anyone can establish an online account with a Bitcoin wallet. Others can send Bitcoin to their Bitcoin wallet without knowing who has the password that controls that wallet. It takes a lot of effort to find out who owns a Bitcoin wallet and even governments don’t have the resources to monitor all Bitcoin owners. Apparently, Bitcoin wallet owners can be discovered if the owner is not very careful or the investigator is sufficiently determined and persistent.

Several nations subsequently adopted the use of Bitcoin. For example, in 2022 the Central African Republic or CAR was the first African country to adopt cryptocurrency as its official currency. North Korea continued stealing cryptocurrency from online exchanges to finance North Korean government operations.

Bitcoin is a digital currency or cryptocurrency. Bitcoin is decentralized and independent of any government or institutional control. A Bitcoin is created by completing complex calculations that are captured in what it called a block of information. The new block is verified as unique by rapidly comparing it to all other blocks in a publicly accessible database called the blockchain. The creator or miner of the new block is issued two or more Bitcoin for each new block. Currently each Bitcoin is worth about $100,000. All Bitcoin currently in circulation are worth over 2,000 trillion dollars. That’s twice the value of annual global GDP. The blockchain software automatically adjusts the prices for existing and new Bitcoin to prevent inflation and maintain fair prices that anyone can verify by accessing the public block chain. Since Bitcoin was invented fifteen years ago, Bitcoin mining, has become a major user of electrical power and cloud computer networks. Bitcoin exists to replace was deal with the inadequacies of traditional currencies. Bitcoin uses a decentralized system that is controlled by no one and everyone. Users deal directly with the blockchain rather than through a bank or other financial institution or government agency. Anyone can consult the blockchain to verify the existence and validity of each individual block and the two or more Bitcoin each block contains.

Criminals, financial analysts, government analysts and curious individuals are constantly examining portions of the blockchain to verify it, improve it or find ways to corrupt and exploit it. All these users must deal with the fact that their activities are visible to anyone who bothers to look. Criminals trying to tamper with the blockchain can always be detected, if not immediately and most are eventually caught unless they take refuge in havens like North Korea or Cuba. Some countries like China maintain and protect groups of hackers who occasionally go after the blockchain. If any of them ever succeed they much share their discovery with the Chinese government that continues to protect them. Any blockchain-based scam is eventually, and often quickly, discovered.

The blockchain replaces banks and makes theft from the blockchain apparently impossible. No proven theft from the blockchain has been proven yet. Many banks have added blockchain access to their customer service menu. While the blockchain replaces banks in some regards, it was meant to be used as another bank service, one that is constantly audited. Stock markets now list Bitcoin and other cryptocurrencies among their offerings

In 2019 UN investigators accused North Korea of using Marine China, a Hong Kong based blockchain firm, to handle North Korean bitcoin and make possible laundering of money, usually cryptocurrency, stolen by North Korean hackers. These thefts amounted to about $2 billion dollars in the last year. Marine China enabled North Korea to convert stolen bitcoin to cash via at least 5,000 small transactions. The small transactions were believed to be more difficult for investigators to spot and trace back to North Korea. That did not work.

By 2024 governments possessed $80 billion worth of Bitcoin. This was less than three percent of the Bitcoin available. Most of this was obtained while seizing assets from criminal organizations. Some Bitcoin has been legalized. The south Asian nation of Bhutan uses its vast hydroelectric power resources to generate Bitcoin. Bhutan generates more hydroelectric power than it needs. Currently Bhutan has the excess power to generate nearly $800 million in Bitcoin to help finance the government. The Central American nation of El Salvador purchases about $200 million in Bitcoin a year to use as its national currency. China holds $6.74 billion in Bitcoin seized from a defunct Ponzi Scheme. China won’t say what it is doing with this Bitcoin and that means it’s using the Bitcoin for clandestine operations like espionage and bribery. China is infamous for using bribery to deal with problems it encounters around the world.

Ukraine raided over $42 billion in Bitcoin from donors worldwide to pay for military operations and economic reconstruction. Other nations like Germany, India, Finland, Britain use their Bitcoin fund government operations, including establishing a digital reserve fund or, in the case of Britain, to support police operations.

The United States, with over $7 billion worth, is the largest holder of seized Bitcoin and auctions off using some of it to fund government operations while retaining most of it for future contingencies. This American Bitcoin is sort of an emergency fund.