“We too have cars in Kazakhstan. They now very modern… some of them reach top speeds of up to 120 miles per week! Also, they better than Western cars, because when engine get old you can eat it.”
― Sacha Baron Cohen as Borat
Dear Reader,
Ukraine… Ikraine… we allkraine…
Russia’s invasion is still the only thing on your neighbors’ lips. Across the boulevard from our Baltimore house, our neighbor puts out a chalkboard any time she has a political cause she wants to tout.
We can’t complain too much. When we were touring the country with our documentary I.O.U.S.A., her chalkboard read, “Thank you, Addison! I.O.U.S.A.” with crazy, rainbow scribbles underlining the doc’s title. (Somehow, given her political persuasion, I don’t think she got the point of the film.)
Sigh.
This week, without provocation, she’s hitching any topic du jour to the Russian onslaught on Ukraine: inflation… oil prices… the U.S. midterm elections… even critical race theory.
Look, we get it — the prospect that things could spiral into World War III is a good reason to be on edge. Watching someone lick the sharp edge of a knife with their tongue is also a good reason. But all the focus on Ukraine overlooks Vladimir Putin’s actions against another neighbor — Kazakhstan.
Out of sight, out of mind?
Many readers will know Kazakhstan thanks to Borat, a fake Kazakhstani reporter played by British comedian Sacha Baron Cohen. If you’re familiar with the character, you’re probably thinking of some of his famous catch phrases right now.
“Very nice”… “How much?”… “Great success…” (Image source: Borat Subsequent Moviefilm.)
The country isn’t quite as backwards as Borat would have you believe. In fact, up until a few months ago, Kazakhstan was home to a thriving Bitcoin-mining community.
Alas, “mining” Bitcoin requires powerful computers to solve increasingly complex equations. It’s a very energy-intensive process, both to run the software and to keep the hardware from literally melting down.
With a relatively cold climate, abundant cheap energy and plenty of space, Kazakhstan offered a perfect place for miners to set up shop. It’s also right next door to China, which proved convenient when the Chinese government suddenly banned digital mining in June 2021.
Unfortunately for just about everyone in Kazakhstan, energy prices were low simply because of government decree. As production costs rose, the government removed the caps — and companies wasted no time boosting what people had to pay for fuel.
The sudden spike led to civil unrest… and violent crackdowns. The Kazakhstani government shut down the internet and Russia sent in troops to keep order in its southern neighbor. With that, the world suddenly lost a good chunk of Bitcoin mining.
While the internet is back up, there are still severe curbs on energy usage, which is limiting how much crypto-mining is done. The country’s close relationship with Russia means it could get swept into the sanctions most of the West are using to punish Putin. And Kazakhstani groups are openly demonstrating support for Ukraine… while criticizing their leaders for staying silent.
In other words, conditions are right for another round of violence, which threatens to take the miners offline again. The sudden loss of supply could make the crypto markets very interesting very quickly.
Hopefully you’re a lot more comfortable with the thought of cryptos after our Wiggin Session with James Altucher.
Reader Gabriel L. — who clued us onto Perth Tolle — reminded us that you ignore James’ prognostications at your peril.
“My first impression of Mr Altucher was watching him on television around 2011, and he was saying stocks were going up for a lot more than anyone expected,” he tells us. “I yelled at the TV, ‘What an idiot!’ Turns out he was right and I was very wrong. I’ve since learned to listen with more humility.”
Speaking of humility, we also heard back from Eric V., who misunderstood James’ stance on the trucker protests in Canada.
“Accept my apology,” he wrote in one of his four emails to us, “and I promise I will listen with a different pint of view.” He probably meant to say “point of view,” but it’s also possible he watched our video with a good ale in hand.
Afterwards he said, “That was truly a lot of fun. He is a joy to listen to. I learned some stuff and will be looking into the book and his service. Definitely worth having him back.”
The book he’s referring to, of course, is James’ compendious Big Book of Crypto. And due to overwhelming demand, you still have a chance to get a copy for free.
Follow your bliss,
Addison Wiggin
Founder, The Financial Reserve
P.S. Eric V. goes on to say that he owns a bit of ethereum coins, but feels like he’s the only one. “I don’t know a single person my age who owns any crypto,” he tells us. “My kids are 35 and 30. Neither of them own any. They are impressed that the old man owns even a little.”
“What I worry about with crypto, cash in bank and brokerage accounts is government buy-in,” he adds. “You can’t pay off $30 trillion in debt without some form of financial repression. High inflation is one way, but I would not put anything past them at this point.”
Neither would we, Eric. And we’ve lined up some guests to address your fears in upcoming Wiggin Sessions — so stay tuned.
In the meantime, add your voice to the conversation at Feedback@TheFinancialReserve.com.
