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Heard an excellent perspective on the Kazakhstan situation the other day and how it relates to bitcoin. The Kazakhs are protesting and rebelling over high fuel
by mabbo 5y ago
Heard an excellent perspective on the Kazakhstan situation the other day and how it relates to bitcoin.
The Kazakhs are protesting and rebelling over high fuel prices. But why would fuel prices be high in a country with large oil and gas reserves? Well, funny enough China banned cryptocurrency mining, and a lot of miners (allegedly) crossed the border into Kazakhstan, where energy is cheap in the form of oil and gas. The proportion of bitcoin mining out of Kazakhstan has massively increased since then.
The miners drive up the demand for oil and gas, increasing price, leading to the protests.
Now, how true is all of this? No idea. But you can bet that in the coming weeks the Kazakh authorities will blame cryptocurrency for the entire issue, redirecting the anger people are feeling. Then, they too will ban it.
And if they're right, and this is what happened, you can expect to see this process repeat again in whatever country has the next cheapest energy,
- noway421 5y ago> why would fuel prices be high in a country with large oil and gas reserves? To prevent arbitraging opportunity. If fuel is subsidised for local citizens, they will start siphoning it out of country to sell overseas and profit off of it. Oil and gas companies would rather do it on their own.
- eskathos 5y agoScott Manley mentioned it in his latest video, though with no source.
- davebailey 5y agoOne of the greatest utilities of cryptocurrency is the ability to monetize energy where it's cheap and expensive to ship it out of country. It effectively monetizes the inefficiencies of the energy markets.
- mabbo 5y ago"Ship it out of country" in what sense? It burns the energy, providing no real value except that the coin 'exists' on the ledger. You can't use the coin for any real purpose. Crypto finds where energy is cheapest and then ensures that it isn't cheap anymore.
- salmonlogs 5y ago> "monetize energy where it's cheap" This is also directly responsible for increasing levels of fuels poverty and inequality. Driving up the cost of energy forces people into making decisions on whether to heat their home, cook their food, and how they live. The direct human impact of this is really hard to justify because some capitalists in the western world want to make a few bucks.
- tomputer 5y ago> But why would fuel prices be high in a country with large oil and gas reserves? Not because of Bitcoin miners: https://www.npr.org/2022/01/08/1071198056/theres-chaos-in-kazakhstan-heres-what-you-need-to-know https://www.npr.org/2022/01/08/1071198056/theres-chaos-in-ka...