Dear Reader

Welcome to your Bitcoin and Global Finance Newsletter for week ending 20th May 2022!

Being the eternal optimist, I always try to open the Friday update with something uplifting and positive. The truth, however, is that there still isn’t much to celebrate.

The UK hit an inflation rate of nine per cent this week as predicted by myself and many others and we’re now at the highest level for 40 years. For many this will be the first time they have experienced something like this.

The UK’s highest ever rate was recorded in the dark days of the mid 1970s where it peaked at 24.21% and, while I don’t think we need to start panicking about those sorts of numbers as yet, it’s likely we’ll be going higher from here.

But we’re not alone. Any cursory glance at the global picture reveals that only nine countries are currently experiencing “normal” inflation of between zero and two per cent with every other nation on the planet seeing their values reducing at ever increasing rates. It raises an interesting question – if all money devalues at the same time, does that negate the effect of that devaluation?

Whatever your view, there’s no doubt our fiat system is under extreme pressure. Without the possibility of Bitcoin acting as a universal hard money system, the picture would be far bleaker.

Just how bad the current markets are was also neatly highlighted in this statistic that my colleague Mati Greenspan tweeted out earlier this week. $2.3 trillion was wiped off the Nasdaq value in the global financial crisis of 2008, $4.4tn lost in the COVID-19 sell off of 2020 and, so far, $7.6 trillion has been wiped off due to current market conditions. Make no mistake, what we’re going though now is BIG.

Russia continues to destroy its own economy (and everyone else’s) in a war it can’t win and looks to suffer another economic blow as many of the western companies that suspended operations in the country have now officially abandoned hope of ever re-entering it. This means they will cease paying their employees and start dumping their assets over the next few months.

So, is it a coincidence that Russian authorities have been talking about the likelihood of legalizing Bitcoin and other currencies in the country? We will see.

Meanwhile, representatives of 44 central banks spent several days in El Salvador this week apparently looking at Bitcoin and learning about how it might work for them. At least that’s how it was reported but, as it turns out, there was a wider scope of discussion than first implied. Still there’s no doubt it was part of the agenda and it will be interesting to see where it goes from here.

One other thing that stood out this week for me was that, while compiling a research piece on Bitcoin mining, I was surprised to note that China’s hash rate has been creeping up recently.

This, of course, is the country that banned Bitcoin mining outright. We physically saw the machines being shipped abroad and the hash rate decline, yet my analysis shows that China is now producing as much hash power as it did in June 2021, the very month of the ban.

We don’t know what’s going on yet and, to be honest, hadn’t been keeping an eye on it having assumed the country was out of game. But whatever is happening, there’s a fascinating story here somewhere.

Have a great weekend!

Jason

Want to learn more about what’s going on in our global financial system and how Bitcoin fits into it? Come to my next free webinar on Wednesday May 25 at 6pm to find out, ask any questions, and grab some free Bitcoin*. Click here to register.

*18+, UK resident, new to Luno only

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