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Bitcoin Mining Ban
Episode 5310th June 2022 • Generational Wealth with Cryptocurrency • McIntosh
00:00:00 00:28:28

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New York State has a bill that is waiting on the Governor to sign that would ban proof of work mining. This would mean that companies would not be allowed to set up new bitcoining mining operations in the state after the bill is passed.

Even with the state Assembly and Senate passing the bill, there is no guarantee it will be signed into law. The governor is now saying that the bill will need to be looked at very closely.

News and Links

https://cointelegraph.com/news/new-york-state-senate-passes-bitcoin-mining-moratorium

https://cointelegraph.com/news/new-york-governor-yet-to-commit-to-signing-bitcoin-mining-ban-into-law

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I can be reached by email at mcintosh@genwealthcrypto.com and on twitter at @McIntoshFinTech. My mastodon handle is @mcintosh@podcastindex.social. Looking forward to hearing from you!

Website

https://genwealthcrypto.com

Music Credits

Protofunk by Kevin MacLeod

Link: https://incompetech.filmmusic.io/song/4247-protofunk

License: https://filmmusic.io/standard-license

Ethernight Club by Kevin MacLeod

Link: https://incompetech.filmmusic.io/song/7612-ethernight-club

License: https://filmmusic.io/standard-license

Transcripts

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Hey

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everyone. Now what on this podcast is a financial advisor and all information presented on this

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podcast is for informational purposes only. Now that we have the legal stuff out of the way,

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let's jump on in. Welcome to the Generational Wealth with Cryptocurrency Podcast. I'm your

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host Macintosh. Today we're going to talk about states regulating cryptocurrency. Today is going

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to be a little bit different. I have been up in New York all week and so this podcast had to be

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pre-recorded. Late last week as I was preparing for Monday morning's episode, I came across

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the news, well I stored away the news that the New York State Senate passed a bill banning Bitcoin

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mining. So we had already talked about this back in April when the state assembly passed a bill,

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so this was the Senate version. It will now go on to the governor's desk and presumably she

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will sign that. Now if she doesn't, that would be great, but I think it's a fairly safe bet at this

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point that she does. Now as I mentioned last episode, I find this a big dichotomy because

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you've got the mayor of New York now who ran, this was part of his platform, crypto's good,

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I'm going to get paid in crypto, we'll make New York the crypto capital of the world.

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And then you've got the state assembly and Senate saying, at least Bitcoin bad, specifically proof

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of work mining bad. Now I don't know if they're trying to force Bitcoin to convert to a proof of

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state system. I promise you, New York, maybe I should just be a fancy consultant and charge you

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millions of dollars to tell you this, but I can promise you, New York, Bitcoin is not going to

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change for you. Bitcoin would not change for China, for the United States. Bitcoin doesn't care. Now

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individual people might care, but Bitcoin doesn't care. And the consensus of the network, so to

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speak, is that for them, proof of work is the best way to do this. And they are going to do that.

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They are not going to change. And it would literally take the entire world banning Bitcoin

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in order to stop that. Now I could very easily sit here and make a number of arguments that are

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in favor of Bitcoin mining. And I will give you one simple example. You have two large corporations

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inside the United States. I can't remember the second one, but the first one I know for sure

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is Exxon. They're a big oil company. They go out and they drill. They drill for oil. And part of

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that process is in a lot of oil places, including the ones that Exxon is dealing with. I'm not sure

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if this is everywhere, but it's at least in the majority of it. When you drill for oil, you end

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up getting natural gas as well. And when they don't have the facilities to handle that, what do they

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do with it? They burn it off. It's called a, well, there's actually a name for it. And I don't

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remember offhand, but they flare it. They burn the oil. Excuse me, not the oil. They burn the

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natural gas. You can see it on the rigs. Now that, from an environmental standpoint, really isn't a

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good thing. But it's part of what we've accepted as okay in order to drill, I want to say mine,

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but drill for oil, which is necessary for our society to function. We are a petroleum-based

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society. Now you might argue that we need to move off of that, and that might be a valid argument,

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but certainly for now, we are a petroleum-based society. Plastics, all kinds of stuff, certainly

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gasoline and diesel, right? The thing is these companies have no way of dealing with that in

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most cases. So they just burn this natural gas off. Now here's the thing. Natural gas,

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you can use to generate electricity. You can use it to run a generator, which makes electricity.

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And what does Bitcoin use to mine? Electricity. That's the whole argument. We're using too much

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electricity on Bitcoin to mine. What can we do? We can put all of our stuff in one of these

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20-foot, or whatever they are, storage containers, haul it out to the drill site,

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set up a generator, tap that natural gas that would be burned off and create

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pollution, and instead convert it into electricity in a cleaner manner so there's less pollution.

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We're generating a steady supply of electricity, which is what Bitcoin mining loves.

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And now we've got something that we can either sell or the company itself can choose to benefit

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from that. Now, I don't know which one of these is going on, but Exxon is doing this

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at some of their fields. And they're not the only oil company to do this. It's getting to be very

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popular, but everybody knows who Exxon is. Well, most people know who Exxon is. They're a publicly

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traded, US-based corporation. I believe they're US-based, but they're certainly on one of the

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stock exchanges here in the United States. And that's what's happening. And you could very easily

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argue that that's beneficial for the environment. So a lot of this field,

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this fear of Bitcoin mining as being so environmentally destructive actually goes back.

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It actually goes back to a paper that was written that, in my opinion, has been very well refuted

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a number of times. So I guess the jury is still out on that. But frankly, New York has taken the

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position that Bitcoin mining bad, and so we're going to ban it. Now, I also have a suspicion

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this particular ban will go to the state Supreme Court at least, if not the Supreme Court, and it

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will get overturned. These companies, these miners, these computers that are mining Bitcoin

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are literally running a calculation. That's all they do. And I do not understand how you can

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ban that. Are we going to ban one plus one? I mean, I don't know. It's just a

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SHA-256 calculation. That's what it's based on. And it just happens to be really hard. And so they

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make really powerful computers to do that. But there's a lot of nuance here, and I'm probably

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not doing a very good job of it. And I don't want to get bogged down into all that. So you

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have states like New York that they are taking... Well, in New York's case, it's kind of a

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schizophrenic approach, and I don't mean to... I'm not making fun of mental illness. I mean,

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literally, you've got the state Senate and House on the one hand who's saying Bitcoin mining bad,

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you've got the mayor of one of the largest cities in America, and easily, in my opinion,

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the biggest financial city. Now, other cities may dispute that, but I believe you could say that

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Manhattan was the financial center of the United States, if not the world. Maybe that's a little

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bit weaker argument, but I would say very clearly it's of the United States. And he's over here

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being all pro crypto, and yet this is coming down from the state. So it is schizophrenic. That's

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literally... There's a break. One goes one way, one goes the other, and it doesn't make sense.

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So they have to resolve that. I don't know what the backstory on this bill is. So I don't know

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what people in the state in general think about this. I know that New York is a democratic state.

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Democratic state, that's certainly true. It leans democratic. And so they are probably in general

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going to be more prone to an environmental argument, if you want to put it that way,

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than say a Republican state. Now again, I can make that argument that proof of work mining

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in fact can be very beneficial. And I will give you another example, actually, while I'm thinking

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about it. I think we mentioned this... Well, we mentioned this last week on the episode.

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If you remember Paraguay with the dam, they're going to go out and basically try and bring in

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as many Bitcoin miners as they can, as many servers as they can, to utilize power that's being wasted

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that's clean power, hydroelectric. And the country's losing money. There's a lack of industry

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there, this type thing, that this will help alleviate. And there's no environmental impact.

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So I don't know. I don't know. I mean, these are difficult things. I get that. But you have

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New York on one hand, and then you have other states specifically. Well, I'm going to talk about

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two other states. And we're going to see this played out across all of the states, really,

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I think, over the next 10 years or so. These are the leaders, so to speak. But you've got Texas,

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on the other hand, which is a Republican state, at least at this point. Although it's kind of in

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an interesting situation where major cities, at least Austin, is very democratic. But anyways,

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I'm not trying to turn this all political, but the state itself has been very pro Bitcoin,

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very pro crypto. And they see it as a good partner for the mining, the oil drilling that goes on

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there and this type thing. So they actually, in fact, got a lot of the business that moved out

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of China when China stopped, when they banned mining. A lot of those miners actually moved

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ultimately to Texas. Now, another interesting aspect, I find all this. So, oh, well,

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and here's another state. I just thought about this one. Wyoming, in fact,

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is very crypto friendly as well. They have made provisions so that you can set up a DAO,

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a digital autonomous organization. I remember when that came out. It's been a couple of years now

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in the state of Wyoming without even being there, kind of like what Delaware does, for example, with

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corporations. You can incorporate in Delaware without living in the state. So they were

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basically trying to be forward thinking about that as a way to encourage people to innovate in that

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state. And then the final state I want to talk about is Florida. Now, on a state level, I don't

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think we're seeing a whole lot at the state level, but you've got famously the mayor of Miami,

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who's trying to compete with the mayor of New York. Now, as I said, New York, in my opinion,

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is indisputably kind of the financial center of the United States, at least in general.

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Miami wants to be the crypto center of the United States. And if the New York state people

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pass this bill and put a big damper on the crypto activities in New York, I think Miami, frankly,

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has a really good shot, even though they're not really well known as a finance. There's finance

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stuff going on there, but not on a tremendous scale, if that makes sense. But I think that Miami

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could be a big player in all this. And their one downside is, of course, they've got hurricanes.

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Beyond that, the state has low taxes. The weather's nice, at least a lot of people like it.

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And there's all kinds of outdoor activities, all this kind of stuff. Miami's known for being

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a place of wealth, if you want to put it that way. So I do think that Miami would have a big chance

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in a crypto race, so to speak, against New York. And we'll have to see how that works out. I think

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that's kind of interesting, actually. But we're going to see this played out across the United

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States. You're going to see all the different states. They're going to end up, they will have

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to choose the side. They're either going to be pro crypto or they're not. And to me, this is a

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very not crypto friendly thing. I think California might, I'll be honest, I think California's

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probably going to end up following New York's lead in this. Now, that's just speculation. But with

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the environmental concerns that they have, I think this will probably end up being the same kind of

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stance that they take. And I think that would be catastrophic over the long term for California.

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California, I could go into whole shows about California. I'm involved in the computer

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industries, as I've indicated. And so I've spent some time in California. I've actually lived there

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for a brief period. I was going into San Francisco, 20 years ago, actually, at this point. It's a

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beautiful city. Unfortunately, at this point, it's not a very nice place. And I'm just not even going

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to go down there. But it's got a lot of issues and tech companies are starting to pull out.

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Because even though it's San Francisco, even though it's right there at Silicon Valley and all that,

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people are getting to the point where they're just fed up. I would never live there again, not in

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its current state. So where does this lead us? Well, I don't know. I mean, this is one of those

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cases where I just don't know. But I do think that we will see, you know, in the next few years,

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I do think that we will see states that win and lose, just like we will see nations that win and

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lose. And we haven't even talked about that on this episode at all. And a final aspect of this is,

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I think we will even see local governments that win and lose. We are starting to see, for example,

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well, Fort Worth, yeah, it was Fort Worth in Texas, right outside of Dallas, just recently said,

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we're going to start mining Bitcoin. And so they're doing a pilot project. And I could see

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large cities, even towns. I mean, well, eventually it will be towns that everybody will, you know,

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all of these governmental type places will be doing this to an extent, I think.

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We'll just have to see. It may take a long time to get to that level. But Mobile, Alabama, which is

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a smaller city, certainly, for example, has started a test program, again, mining Bitcoin. So we're

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going to see this as things shift, because on an economic scale, and I've discussed all around this,

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on an economic scale, the United States and the world is going through, in my opinion,

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severe changes. And a lot of it ties into the use of fiat, the currency that's not backed by anything

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other than a country saying it's a good currency. And the United States is dealing with this. We're

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in the middle of, in my opinion, a recession already, but it's going to get a lot worse.

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It's officially not a recession, because the definition of recession is actually quite

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specific. And according to that definition, we've not reached that level yet. But I say look around,

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right, when people are struggling to find shelters that they can afford, housing that they can afford,

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inflation is going higher and higher, and just all of these things.

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I do believe we're going to see even more currency inflation. And potentially, down the road,

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we may see hyperinflation right here in the United States. But the problem is,

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this is going to tie back. And here's why I'm talking about all these governmental entities.

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Even, let's say, the town that I live in, I don't live in a city, but let's say the town that I live

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in, they have retirement programs. They have people, city people, who they expect money every

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month after they've worked for the city, for the town for 20, 30 years, and they retire,

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and then they're supposed to get their money. Well, a lot of places are having trouble paying

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those kinds of things. And I think a lot of those funds, a lot of those plans, they will get converted

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over to Bitcoin or some other currency before we know it. And if a county, a town, or a city

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can invest in Bitcoin mining, there is an upfront expense. And then there's actually an expense

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going, you know, a monthly expense. There's a recurring expense as well. But what it does is

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it creates a steady flow of income that's fairly predictable. Yes, Bitcoin goes up and down,

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but the amount that you've mined does not. Now, over time, it will slowly go down, but that's

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because of the difficulty levels of mining. It's beyond the focus of this conversation,

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but it does allow them to plan a lot better. I think we'll see that sooner than a lot of people

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may think. Maybe in the next 10 years or so, we'll see a fair amount of adoption of that.

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I think it'll be interesting to watch. Anyways, that's really kind of beyond the scope of this

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episode. I am going to go ahead and wrap it up here. There won't be any news for this episode

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because I had to pre-record this, so I apologize. If something dramatic happened, I'm sorry. I did

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tweet about it, I'm sure. My Twitter account is McIntoshFintech, so you should follow me there

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so that you don't miss out on news. And we'll talk about whatever happened on the next episode.

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All right. The Generation Wealth of Cryptocurrency podcast supports Podcasting 2.0. It's a value for

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would tell your friends about the Generational Wealth of Cryptocurrency podcast. Thanks for

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being here. I hope this has been helpful, and I would love to hear from you. I'm on Twitter

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at MacintoshFintech, just like I said, and you can reach me by email at macintosh at

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genwealthcrypto.com. Of course, the Generational Wealth website is at genwealthcrypto.com.

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