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Recent pro-Bitcoin developments from  could put the Eastern power in a lead position as inflation grows. How will other powers react?

On February 15, the n Ministry of Economic Development signaled a bullish development around Bitcoin; reduced costs for bitcoin miners. But what can we make of this?

First the obvious: yes it is bullish. The n Ministry is reportedly considering "energy tariffs" for bitcoin (and other cryptocurrency) miners, as well as taxing cryptocurrency-to-ruble conversions -- as long as said facilities are constructed in particular regions (you don't want bitcoin miners just popping up anywhere, not that they operate in this manner, anyway).

One of the justifications from the ministry (as noted here) has been that bitcoin mining incentivizes great increases in energy generation, while allowing for rapid pivoting of demand by the grid. This means that if energy demand were to shift quickly, say in the wake of unorthodox weather situations, then the grid has the capability to limit or shutdown miners with the intent of supplying energy demand where it is most pertinent.

Secondly, this places pressure on Western powers. The U.S., the United Kingdom and the European Union have been slow to make concrete decisions on Bitcoin and Bitcoin mining facilitation. Which isn't surprising in the least; not only does Bitcoin's censorship resistance and decentralization threaten the feasibility of the SWIFT system, but they also make controls over capital flight much more difficult to enforce.

Furthermore, there is concern around inflation sticking around, particularly as it might affect the price of energy. This is another area in which  may play a pivotal role, as incentivizing bitcoin miners to bring business within their jurisdictions would not only provide economic stimulation to in the form of infrastructure projects, but would also strengthen the resilience of the grid by providing an additional source of monetization that is demand-flexible.

As the cost of natural gas increases, the incentives to invest in renewables decreases (due largely to their risk of intermittent production). It is for these reasons that  would be pressed toward seeking to mitigate energy cost inflation going forward in the form of incorporating bitcoin mining operations into energy projects.

These justifications suggest that  is interested in incentivizing bitcoin mining within its borders, in addition to the following points:

• Inflation is gripping energy markets. What started as a move to cleaner energy sources became a massive liability during COVID-19 lockdowns. When economies pause, demand does not, which includes demand for energy.

• Tangentially, the globe has been aggressively reducing nuclear energy generation since 2005. This is largely because facilities capable of generating this energy have been well past their safely-functional age. Unfortunately, officials could not have picked a worse time to shut down this potent and efficient form of energy generation. Now there is a dramatically reduced resilience in the grid, meaning the only things we have left are fossil fuels and highly-unreliable energy sources (aka "renewables"). These sources also require massive amounts of fossil fuels to not only produce, but to extract from the earth.

• With energy markets experiencing inflation, the costs of goods and services are also on the rise. As mentioned before, we need to expend energy in order to generate energy. This means that the costs of resource extraction, transportation, refinement, packaging and storage by relation will also all be experiencing increases in costs (regardless of what the CPI might say).

• If goods and services are falling to the whims of inflation, this also means that food is being impacted by inflation. As the energy cycle dictates, life requires energy to propagate. So, by relation, agriculture and livestock also require significant measures of energy in order to provide the food that our children and our communities rely upon to grow healthy and strong. This energy comes in the form of seed, feed, water, equipment, fertilizers, pesticides and herbicides, and so on.

Now, we come full-circle back to recent developments out of , and now, China.

On February 2,  announced a ban on ammonium nitrate exports through April with the intent on being more capable of supporting domestic agricultural efforts. The problem?  is the United States' leading source of ammonium nitrate, a very important ingredient for munitions production, adding further weight behind recent developments and activities on 's Western border. Going further on the fertilizer thread was China's banning of fertilizer exports this past summer.

However, the crumbs of this Hansel and Gretel tale don't stop there. With the aforementioned points, we get enough scope to see how inflation is significantly impacting all of us, but there is more. Consider 's activity in e and how it is stoking the flames and fears of war. A normal economy is heavily reliant on energy, and war magnifies energy demand by an order of magnitude (if not more). If  is intent on war, the European Union will require significant amounts of energy to facilitate resistance -- in this particular case, said energy would be coming in the forms of oil and natural gas.

And who is the EU's largest source of energy? It's .

To make matters worse, Germany is the leader of manufacturing in the EU. And what country does Germany rely on heavily for trade in order to sustain said manufacturing? It's China.

To make matters even more complex, China is applying militaristic pressures of its own upon Taiwan, a key player in the global chip manufacturing space -- upon which technology in general relies upon heavily.

If war grips this area of the world, I would expect further increases in prices across the board, as technologies would increase in price due to consistent/increasing demand meeting restricted supply, if said chip manufacturing sites were to go offline.

Now, for a really big question, "big" in the sense of implications on historical, geo-political and even individual levels of "big." Where does Bitcoin fit in?

In incentivizing mining operations,  is signaling increasing support and appreciation for the nascent asset and technology stack that accompanies Bitcoin's network operations and incentives. Additionally, because Bitcoin operates outside of the purview of any one nation or group's borders, the risk of sanctions is all but eliminated if trade is done via a neutral asset such as bitcoin.

Furthermore, a nation that were to adopt such a neutral asset via trade (possibly even pricing energy in bitcoin) would open up its coffers to trade with quite literally anyone, inviting an influx of demand for goods and services rendered.

The U.S. and its allies are now effectively backed into a series of corners. Can the U.S. attempt to ban Bitcoin and its transactions? It can try, but will fail. China has already tried to do so, multiple times, and the same goes for India. Not to mention, the U.S. now has a multitude of politicians advocating for Bitcoin adoption, like U.S. Senator Cynthia Lummis and state governors showing political support for the asset and network.

On top of that, there's the massive inflows of network hash rate that came to U.S. shores after China's infamous mining ban. And, going even further, there's the consideration that the FDIC has been looking into providing support for American banks to hold bitcoin on their balance sheets.

As the saying goes, "Bitcoin is for friends and enemies."

Are  and China pushing their agendas to not only get what they want, but also force U.S. and other Western powers into inflationary environments to weaken the petrodollar (U.S. dollar) hegemony? And, in doing so, will bitcoin be capable of proving to the world that it truly is an asset of the future, where allies and foes transact equally?

Then, in this environment, could we also see both sides pushing for Bitcoin adoption and proliferation as each side aims to keep pace with their rival(s)?

This is a guest post by Mike Hobart. Opinions expressed are entirely their own and do not necessarily reflect those of BTC Inc or Bitcoin Magazine.