Could a PetroBitcoin Overcome the PetroDollar?

GB Market Commentary 25/03/2022

by Marcus Sotiriou

After hype surrounding Do Kwon’s $3 billion Bitcoin accumulation plan, Bitcoin continues to climb higher as it rose over $44,000 yesterday. Besides the bullish narrative behind Bitcoin being used as a stablecoin reserve asset, there are now talks of a Petro Bitcoin instead of a Petro Dollar, adding another narrative to the asset. This is because Russia is considering accepting Bitcoin as payment for its oil and gas exports after being faced with sanctions. The chair of Russia's Duma committee on energy said yesterday in a video conference that when it comes to "friendly" countries such as China or Turkey, Russia is willing to be more flexible with payment options. Therefore they are considering the national fiat currency of the buyer, as well as Bitcoin, as alternative ways to pay for Russia's energy exports.

I think this demonstrates Bitcoin’s ‘ideological malleability’ as on chain analyst Will Clemente says. This is the idea that it fits many narratives, as can be many things for various people, making it unstoppable.

Gas giant Exxon is now running a gas to Bitcoin mining programme in America, which leverages excess gas to power Bitcoin mining machines. This leads to significantly less pollution - “18 million cubic feet of gas per month that would have otherwise been burned off—or flared—because there aren’t enough pipelines”.

The fact the fourth largest oil company in the world is integrating Bitcoin into its operations is also a very bullish signal. More importantly though, this integration allows Bitcoin to be mined in a more environmentally friendly manner, which is a major concern for institutions. Soon many investment management firms will have no choice but to have an allocation to the asset, which is why the $840 billion market cap seems so undervalued to many.