Ukraine has received more than 125 million US dollars in crypto donations since the Russian invasion began on February 24, 2022 * by Christoph Bergmann
Alex Bornyakov is Ukraine’s deputy minister for digital transformation – and a supporter of Bitcoin, Ethereum and other cryptocurrencies. “Despite the bear market, crypto has become an essential tool for Ukraine’s defence, providing flexibility and speed that literally saved our soldiers’ lives”, Bornyakov states in a tweet. “Every ‘crypto winter’ leads to a ‘crypto spring’, but the industry is here to stay.”
In the early phase of the Russian invasion, Ukrainian charities have raised more than $125 million in cryptocurrencies, states analyst company Crystal Blockchain. In addition to direct donations, $1.2 million have been made from the sales of NFTs.
According to Crystal Blockchain, 45 verified organisations have received donations in cryptocurrencies. For example, the Ministry of Health, the Return Alive Foundation, the Cyberpolice of Ukraine and many others. Usually the cryptocoins are exchanged for weapons, ammunition or other military equipment, such as radios, first-aid kits or bulletproof vests.
Especially in the first weeks of the war, cryptocurrencies were very helpful. They made it possible to pay for foreign deliveries of weapons and equipment, while Ukraine’s central bank limited incoming and outgoing payments. “Thanks to crypto donations, we were able to quickly buy equipment and send it to the front,” Bornyakov explains.
Of course, the receivers had to cope with crypto’s high volatility, as they received most donations in spring and their value has roughly halved since then. However, most organisations are only moderately affected by this. They usually spend the money quickly, or they change the volatile cryptocurrencies into stablecoins. To give an example, the government’s official wallet has received almost 600 Bitcoins, but currently holds less than 0.05*.
Charities do suffer from the fact that the flow of donations is drying up. According to Bornyakov, they are coming in much less frequently than at the beginning of the war, probably because the global crypto market has crashed and war fatigue is setting in.
Ukraine’s government is trying to compensate this by selling NFTs. The revenues are supposed to fund military equipment and humanitarian aid, and help rebuild museums, theatres and other cultural institutions. “We are using the latest technologies to bring Ukraine closer to victory,” Ukrainian Digital Minister Mykhailo Fedorov wrote on Telegram.
NFTs are even more volatile than cryptocurrencies, and their market volume is falling more rapidly than the rest. Nevertheless, the digital museum Meta History, which sells NFTs on the Ukraine war, is optimistic about raising funds. For each of the first 36 days of the war it has issued at least one NFT. These crypto artworks commemorate specific events and cost 0.15 ETH each. In addition, the series “Avatars for Ukraine” had raised nearly 13 ETH – a relatively small amount, but it helped buying medical supplies.
Russia’s despicable war against Ukraine shows that cryptocurrencies already serve an important purpose, especially in critical situations.
* These are numbers from August 2022. I suppose they are higher now, but I could not find more current data. However, the exact number does not really matter. The war between Ukraine and Russia is probably the first war in history in which cryptocurrencies play an important role, that is what this article is about. It was first published in August 2022, we use the first anniversary of the war to re-publish it in English.