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We discuss the applicability of the naturally occurring compound Ferrous Oxalate Dihydrate (FOD) (FeC2O4·2H2O) as an anode material in Li-ion batteries. Using first-principles modeling, we evaluate the electrochemical activity of FOD and demonstrate how its structural water content affects the intercalation reaction and contributes to its performance. We show that both Li0 and Li+ intercalation in FOD yields similar results. Our analysis indicates that fully dehydrated ferrous oxalate is a more promising anodic material with higher electrochemical stability: it carries 20% higher theoretical Li storage capacity and a lower voltage (0.68 V at the PBE/cc-pVDZ level), compared to its hydrated (2.29 V) or partially hydrated (1.43 V) counterparts.