As Western sanctions tighten, Russia and Iran are developing innovative strategies to sustain their oil-dependent economies through the use of cryptocurrency. With Russia’s oil trade valued at $192 billion annually, and Iran—a once significant oil exporter—both nations are utilizing digital currencies such as Bitcoin to bypass financial restrictions, transforming global trade under duress.

Russia is increasingly engaging with cryptocurrencies, including Bitcoin, Ethereum, and Tether (USDT), to facilitate its oil transactions with China and India, effectively sidestepping Western sanctions. This method, while still a minor component of Russia’s vast oil market, is quickly gaining momentum as an innovative workaround to the financial constraints imposed after the 2022 invasion of Ukraine.

Sources familiar with the situation, who prefer to remain anonymous due to the sensitivity of the matter, indicated that Russian oil companies engage intermediaries to convert Chinese yuan and Indian rupees into cryptocurrency, which is then converted back into rubles. One insider disclosed that individual traders can execute monthly crypto transactions with China that reach tens of millions of dollars.

Following the legalization of cryptocurrency for international payments in December 2024—a strategy advocated by Finance Minister Anton Siluanov—Russia has sought to counteract delays in payments from key partners like China and India. Due to concerns over potential Western backlash, local banks in these countries have slowed their dealings linked to Russia, prompting the country to explore alternatives.

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In parallel, Iran is transforming its oil resources into Bitcoin through mining. Amidst a decade-long reduction of 70% in oil exports due to U.S. sanctions, Iran has been using excess oil and gas to power mining operations. According to Elliptic’s analysis in 2021, this contributes to 4.5% of global bitcoin mining, which consumes energy equivalent to 10 million barrels of crude oil annually—approximately 4% of its 2020 oil exports. Through this strategy, Iran’s central bank collects nearly $1 billion in Bitcoin from licensed miners for import funding. This represents a novel approach: Iran is essentially “exporting” oil in digital currency form instead of through physical shipments.

Beyond Sanctions: A New Playbook for Oil Trade

This shift goes beyond mere evasion. Crypto enhances transaction speed, making it desirable even if sanctions diminish. Even as U.S. President Donald Trump hints at new relations with Russia and an end to the Ukraine conflict, the future of sanctions relief is uncertain. Nevertheless, sources indicate that the efficiency of crypto could firmly establish its role in Russia’s oil trade strategies, reflecting similar trends in other sanctioned nations like Iran and Venezuela, where digital currencies help sustain economies excluded from dollar-based trading systems.

High Stakes Ahead

Russia’s oil trade, a massive $192 billion operation according to the International Energy Agency (IEA), is heavily reliant on China and India, both of whom have taken advantage of deeply discounted crude since Europe restricted imports following 2022. However, U.S. Treasury actions in January 2025—accounting for the sanctions imposed on oil titans Gazprom Neft and Surgutneftegas, in addition to 183 tankers—have intensified these pressures, raising shipping expenses and inducing dependence on “shadow fleets” and crypto transactions.

As reported by Chainalysis in September 2024, Russia’s central bank is developing cryptocurrency infrastructure to counter sanctions, a movement that may motivate other countries. Some forecasts suggest that increasing crypto utilization by China and India could weaken the petrodollar’s supremacy, even though skepticism exists about these nations entirely integrating cryptocurrencies due to hesitant regulatory perspectives.

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• Russia Uses Crypto for Oil Trade: Russia is leveraging Bitcoin, Ethereum, and USDT to navigate sanctions and trade oil with China and India.
• Iran Converts Oil into Bitcoin: Iran utilizes surplus oil and gas for Bitcoin mining, generating nearly $1 billion to support imports.
• Growing Role of Crypto in Sanctioned Economies: Both Russia and Iran are expanding their use of cryptocurrency, showcasing its potential beyond merely evading restrictions.
• Potential Challenge to the Petrodollar? If China and India increase crypto engagement, it could undermine the dollar’s dominance in global oil commerce.