Where will the center of crypto be? A country-crypto mining assessment and a 2022 prediction.
Updated: Dec 2, 2021
Also, how is it that Asia is still the top continent for cryptocurrency despite the ban on everything crypto from China? They even made Alibaba take off any products that were remotely related to mining cryptocurrency. (But this also might be Beijing kicking Alibaba while it’s down. Honestly, Beijing hates Jack Ma.) Retailers called complaining that there products were no longer able to be displayed and sold Alibaba’s retail arm, Lazada. (Lazada is a lot like Asian Amazon, but without the services that go beyond selling and shipping). Many of these retailers make almost all of their sales through Lazada. In effect, it bankrupted thousands of tech-selling middlemen in and around China. Many of these mid-level retailers claim that these products have no use whatsoever in mining cryptocurrency. (This author does not have anywhere close to the technical knowledge to confirm that, but it sounds truthful.) Some of the banned products were basically generic motherboards, external drives that had some odd features…China just put a blanket down on any of these products and said, “Do not sell them anymore or face criminal prosecution.” China does not fu*k around when it makes a decision. Let me return from my tangential diaspora, and let’s talk about how the hell the US became the top mining country in the world with fairly expensive electricity, and how Asia not only remained the the top cryptocurrency user in the world, but it increased by 700% since the Chinese ban. The US is still Number one despite fairly expensive electricity. But it’s still the US. We don’t pay expensive electric fees compared to other countries relatively, but there are places where it’s much cheaper! And it’s not always the developing world. The developing world often has much more expensive electricity. This author has lived in homes where he could only afford to cool his bedroom at night. And the bill was always a shocker—even when my landlord wasn’t ripping me off. I don’t have answers. It’s also clear that the one thing that stays constant in cryptocurrency is change. Maybe defi really does belong in Asia near Buddhism. I also have some other odd observations. Living in Southeast Asia, my focus is here, obviously—and I hear some weird shit. The most shocking thing that caught my eye was that Laos, a country that completely cut itself off from the rest of the world until 1999 (trust me, I was there in 2001) is now inviting miners to open businesses in the country. There are nine major rivers in Laos. There is no natural gas, there is no oil. Lao PDR, as they prefer to be called, currently sell over 99% of all the electricity they produce, mostly to China, Thailand, Vietnam and some other neighbors… But after this year, the People’s Democratic Republic of Laos will not have enough customers for its electricity. It will literally have a glut of unused, clean, carbon neutral electrical power. With surprising foresight and even more surprising quickness, the Lao PDR’s shot-callers saw the opportunity and jumped on it. The last time I spoke to my contacts in Laos, there were already eight mining companies that were already operational. The government of the Lao PDR issuing licenses for foreign owned or partially foreign owned companies in a few months is lightspeed. It’s warp 9. If there are any potential miners out there, or people that would consider mining but the countries that offer the cheap electricity just suck, Laos is an unbelievably lovely place to live. Move there now. This author lived there for 4 years, and then 4 years later was given the opportunity to go back for a year. And possibly the most important long-term advantage to Lao crypto mining is that it uses exclusively hydroelectric power. They couldn’t even cheat if they wanted to. There’s nothing else under the ground naturally in Laos that ignites, with the exception of the hundreds of thousands of bombs my country dropped on them during the secret war. So what other countries offer cheap electricity? The countries that offer cheap electricity for crypto mining are Russia or Iceland or Georgia or the UAB—nothing against those places. I’m sure they’re beautiful with wonderful cultures. But they’re not exactly the most fun places to live. The US offers the best option: Washington State has an excess of wind energy. So there Bitcoin production is completely green. West Texas is also a new popular destination because of their very inexpensive electricity rates, but this is not from green power. It’s literally from having too much natural gas and it going to waste in the atmosphere. Venezuela is another hot spot for miners, and if you speak Spanish, it’s probably a great spot despite its political turmoil. And you could probably trade tiny amounts of crypto for kilos of cocaine from the Colombians. (That last part I was being just being a jerk, but it’s true. Everyday, Venezuelans carry as much gasoline on their shoulders as they can through the jungle to meet Colombians who are carrying cocaine to trade for it.) Still, I imagine it would be a great place to live. But you would have to navigate a country that is going through something more than political turmoil: cultural and political revolution might be more apropos. So, for my money, I’d rank Lao PDR number one, Washington State number two, and Venezuela number three. Washington state is truly a beautiful and wonderful place to live, and it never snows or grows too cold as long as you are West of the Rockies, which most residents are…Venezuela has always been a fun place to be. But the current state of its economy and it’s runaway inflation (despite being the most hardened expat/traveler/international man of mystery or just general tough guy) makes it a tough choice. And if you don’t speak Spanish fluently, forget it. Also, I’ve been in countries where I’ve earned 45 times more than the average citizen of the city I was living in…it’s a difficult thing to live with long term, no matter how much you give away. While the state of Washington is great, it comes with all of the US laws and regulations, as well as all of the State of Washington’s, as well as whatever local county you happen to set up in. And then there’s the tax, and the US oversight by the Department of the Treasury through multiple offices, including, but not limited to the IRS. But if you want to stay in the western world, this is your choice. But there are things to think about. The IRS seized over 3.5 billion US dollars in cryptocurrency in 2021. They said they believe that number to go up substantially next year. Also, you have to remain legal and above board. The days of cowboying are coming to a close. The new year is going to show that the Americans are not playing around. Most people misunderstand American jurisdiction and extraterritorial jurisdiction. There are very few banks in very few countries that don’t allow the United States to look at minimum, the deposits of US citizens. It has become the law of foreign countries to allow the US to do this. The United States ability to hunt around other banks is unlike any other country or any other time. If your education on this came from before September 11th, 2001, it has all changed. By and large, America can look at whatever it wants to. So if you’re living in the gray world, or completely the black, unless you can buy everything for crypto and have no use for Fiat or a bank accounts at all, you’re going to have trouble. My last blog was on the US government’s regulation in 2021—I’ll end this with a prediction of US regulation in 2022. I am an optimist. The United States Government, with not only a team from the Securities and Exchange Commission, but also the Department of the Treasury’s Office of Foreign Asset Control and the IRS—will meet with the shot callers and academics and influencers and even Elon Musk and Mark Cuban, as well as crypto investors with the top officers of the biggest US crypto exchanges—and some outside of the US—and they will hammer out a deal that we can all live with. We have this year to become the world’s crypto center—after this year it will be too late. (Coinbase is the only crypto exchange in the top five in the world that is from the United States. The other four are not American.) At this point, the United States government has realized that burying not only cryptocurrency, but all decentralized blockchain tech is like trying to unplug the internet in 1991. All of the main actors want this to work. None of them want to see the center of cryptocurrency move outside of the US. The US is the financial center of the world, and that should include cryptocurrency (because if it doesn’t, the initial statement won’t be true for too much longer.) So I believe there will be some significant regulation along with some substantial taxation; however, it will come with the treatment of cryptocurrency, NFT, or any other digital asset with the same protection any other US laws provide for currencies or assets or property or securities or collectibles or whatever the case may be. But then the government has to take its hands off, except in the spring when it collects taxes, and let the crypto world run on its own and change our reality forever like the internet did. Shot callers and academics and influencers and Elon Musk and Mark Cuban, as well as crypto investors with the top officers of the biggest US crypto exchanges—and some outside of the US (Coinbase is the only one of the top five crypto exchanges in the world in the US.) and they will hammer out a deal that we can all live with. We have this year to become the world’s crypto center—after this year it will be too late. At this point, the United States government has realized that burying not only cryptocurrency, but all decentralized blockchain tech is like trying to unplug the internet in 1991. All of the main actors want this to work. None of them want to see the center of cryptocurrency move outside of the US. The US is the financial center of the world, and that should include cryptocurrency (because if it doesn’t, the initial statement won’t be true too long.) So I believe there will be some significant regulation along with substantial taxation; however, it will come with the treatment of cryptocurrency, NFT, or any other digital asset with the same protection any other us laws provide for currencies or assets or property or securities or collectibles or whatever the case may be. But then the government has to take its hands off, except in the spring when it collects taxes, and let the crypto world run on its own and change our reality like the internet did.