I doubt this is correct.The gain here is around 120 dB. That's required.
The LM386 already has both inputs biased so they work perfectly when floating.The schematic is silly. It might work if you can get the LM386 to bias correctly
Of course a transformer with a low input impedance and a high output impedance produces voltage gain but the transformers and gain are not needed in this simple circuit....and transformers produce a loss, never a gain!
the power it can consume is far lower than would cause any significant heating or smoke
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