The Washington PostDemocracy Dies in Darkness

As bitcoin plummets, Miami vows to hold onto its crypto dreams

NFT collector CyptoNovo, left, joins Pussy Riot performers onstage during the CryptoPunk party at the Institute of Contemporary Art in Miami on Dec. 2. (Bryan Cereijo for The Washington Post)

MIAMI — When Miami Mayor Francis Suarez unveiled an 11-foot, 300-pound black fiberglass reproduction of the Wall Street bull last spring, he hailed it as a symbol of the city’s arrival as the “capital of crypto.”

“Welcome to the future,” he said, calling for digital currencies like bitcoin to be “integrated into every aspect of society” before the end of the year.

But eight months later, the Republican mayor’s dream of turning Miami into a hub for the digital currency industry has hit a speed bump.

The value of bitcoin has plummeted, a blow to Miami residents who bought into Suarez’s call to invest in digital currencies. MiamiCoin — the city’s own cryptocurrency — is now essentially worthless. And crypto exchange FTX’s meltdown has had ripple effects here.

Sam Bankman-Fried’s Bahamas-based exchange was expected to open its U.S. headquarters in Miami. One of the city’s signature stadiums is FTX Arena, where the NBA’s Miami Heat play home games. Now Miami-Dade County officials are asking a judge to end the $135 million, 19-year naming rights deal.

The collapse of crypto has emboldened Suarez’s critics, who say the industry’s nosedive reinforces their view that Miami has, once again, recklessly bet parts of its future on untested technology and wobbly economics. There is also concern over whether Miami will remain a top destination for young tech workers now that pandemic-related restrictions in San Francisco and New York have eased.

“A bunch of con men selling imaginary coins and magic beans is not that interesting of a story,” said Billy Corben, a documentary filmmaker and longtime skeptic of Suarez’s embrace of bitcoin. “But the fact is the government and its elected officials were complicit in it and dragged the city in it.”

But throughout Miami, a city that was built around risky financial deals and boom-bust economic cycles, there is little sign that government officials and local crypto investors are rethinking their embrace of digital currencies and blockchain technologies.

Instead they are hedging on the city getting through what is becoming known as a “crypto winter” in belief that bitcoin will bounce back and help redefine the city as a hub for creativity, finance and tech.

At Miami’s hallmark art fair earlier this month, crypto fanatics swarmed raucous parties and exhibits. The event, Art Basel, draws celebrities, artists and locals to Miami each December, and blended digital currencies and art throughout.

Digital firm Tezos offered visitors at its exhibit inside the Miami Beach Convention Center the opportunity to mint their own artwork on its blockchain. Across Biscayne Bay in the city’s lavish Design District, the Institute of Contemporary Art hung a physical copy of a non-fungible token (NFT) from the CryptoPunks collection. The image showed a pixelized depiction of a woman named after Miami’s iconic 305 area code — and was placed next to Andy Warhol’s “American Lady.”

As fairgoers perused the art and bartenders poured vodka and tequila drinks, Russian punk rock band Pussy Riot performed nearby, mixing lyrics about sexual freedom with support for crypto currencies.

“We have CryptoPunks next to Warhols, and 18 months ago you wouldn’t even think of that,” said one man who collects and develops CryptoPunk art work, and would only identify himself by his digital identity, CryptoNovo. “Miami is still a place that welcomes the CryptoPunks into the city.”

‘All it takes is one hurricane’

For more than two years, Suarez has made promoting Miami as the future of blockchain and virtual currencies his signature platform.

He urged tech companies to give up chilly San Francisco for perpetually warm Miami, offered to take his salary in bitcoin and considered paying city employees with it as well. He also launched MiamiCoin, a virtual currency created in collaboration with nonprofit CityCoins. Thirty percent of the proceeds would go to Miami’s government — which Suarez hoped might one day be enough to negate the need for local taxes.

His pitch to outsiders: Miami is uniquely positioned to become a hub for crypto companies because of its central location between markets in Europe, the Middle East and Latin America, where there has been growing interest in decentralized currencies.

“Crypto capital of the world,” he declared on Twitter in June 2021.

Until recently, Suarez’s bet seemed to be paying off.

In February, research firm Telstra Ventures published a report that found Miami was emerging as a new tech hub. The city saw a 2,061 percent increase in investments in 2021 involving blockchain, a digital ledger that records and shows all transactions made on it. Miami trailed only San Francisco, New York and Los Angeles in financial deals related to the technology that year, Telstra Ventures concluded.

“Mayor Suarez’ bid to turn Miami into the blockchain & crypto capital of America is coming true,” the report’s authors concluded.

But there have always been weak points in the pitch for Miami as a crypto capital. Skeptics note the city isn’t located near an Ivy League school that can serve as a funnel for tech workers. That concern was somewhat assuaged during the pandemic as young workers flocked to Miami. Now there are questions over whether they’ll stay.

Simon Glenn, the chief marketing officer for the Blockchain Center, a New York-based group that promotes distributed ledger technology, said there was an “unspoken agreement” among many pioneers in the crypto industry to resettle or hang out in Miami during the pandemic.

But Glenn said it may take more than warm weather and white sand beaches for Miami to continue to attract and retain highly educated workers.

“Miami is hot right now for people, because it is one of those cities where you can walk around the streets and just find someone new and interesting who is relevant to you,” he said. “But I don’t know if it continues.”

“Everyone including the mayor is betting that they will stay,” added Glenn, 26, who travels between New York and Miami. “But these are grass-roots communities, and all it takes is one hurricane, literally or metaphorically, and everyone will run back to San Francisco or New York.”

‘This is about a younger generation’

Raymond Yuan, founder and chief executive of Singapore-based CTH Group, is one crypto venture capitalist who is betting Miami will remain the future of blockchain innovation.

Yuan recently announced that his company will move its global headquarters to Miami, and Yuan is looking to buy a second home in the city.

CTH Group is exploring how to use blockchain technology to make the internet more immersive through things like “plug and play” video games. To achieve that, Juan said it will be up to the “young generation” — which he sees thriving in Miami.

“For us, this [decision to move] was quite easy,” Yuan said. “Miami is a very international place. It’s the connection between North America and Latin America, and people are very young, and very energetic.”

Yuan added that many start-ups are now deliberately trying to avoid locating in Silicon Valley or Seattle, where they would have to work in the shadows of the big technology companies who built modern-day internet applications.

“We have seen many stories in our history, when there is a new technology cycle, the old giants try to assert their power, and hold their power, and they don’t want to hand over to new companies,” Yuan said. “This is about a younger generation, and younger companies.”

Julian Holguin, the chief executive of Doodles, which allows users to own NFT graphics that resemble cartoon characters, relocated the business to Miami in August. Holguin also remains bullish on both crypto currency and Miami’s future, telling the audience at a recent summit that setbacks in the industry are in fact a sign of growth.

“This is no different than any nascent technology that is emerging in the very early days,” he said. “This tech that we are trying to pioneer is going to have a much more positive impact in the long term than any of the heartache that people felt in these most recent times.”

But after crypto currencies lost more than $2 trillion in market value over the past year, analysts caution it will take time for the industry to rebound.

Efforts by U.S. cities such as Miami and New York to benefit economically from blockchain technologies may be further hindered by stiff competition from cities in Asia and Europe, said Katie Talati, the director of research at Arca, a Los Angeles-based investment firm that specializes in digital assets.

“While I do believe we have had a great setback, I don’t believe it is nearly the end of the industry,” Talati said.

Martin Nandy, 48, said despite FTX’s bankruptcy, he’s already back at work trying to highlight the potential benefits of crypto technology, especially in developing nations and marginalized communities domestically. He said digital currency allows for swift transfer of assets, including remittances.

“And when you look where Miami is, you have all of South America that can benefit from decentralization, all of the Caribbean that can benefit from it,” said Nandy, who is Haitian American and goes by the internet moniker “Captain Haiti.”

Nandy is trying to use an NFT to stave off the rapid redevelopment of Miami’s historic Little Haiti neighborhood. After discovering 17 buildings in the community are up for auction on Dec. 15, Nandy created an NFT in hopes of raising enough money to bid on at least one of the buildings. Members of the public can buy a song for $18.04 — a nod to Haiti’s independence in 1804.

If he succeeds, Nandy says the building will be used for affordable housing or community events.

“In the crypto sphere, selling 1 million NFT’s in a matter of days is not impossible,” he said. “And by doing so, we can make decisions as a community, and not just based on capitalism.”

‘Tsunamis of opportunity’

But throughout South Florida, there remains deep skepticism over crypto’s possible benefits, as well as Suarez’s decision to become a chief booster for the industry.

Thomas Kennedy, a Miami resident and Democratic National Committee member, accused Suarez of being aligned with “grifters” who are chasing “fever dreams” instead of dealing with issues such as a severe lack of affordable housing and chronic flooding due to sea level rise and overdevelopment.

“I think he is reckless, dangerous, irresponsible and neglectful,” Kennedy said of Suarez’s gamble on MiamiCoin. “If you live here, you see that Miami has a lot of problems, so it is just stupid and disappointing to see our mayor palling around with grifters at these tech conferences.”

Corben, who directed the hit documentary film “Cocaine Cowboys,” compares Miami’s dream of striking rich on crypto to the city’s long history of embracing risky business enterprises.

“Miami has no indigenous industry, and we persist from hustle to hustle,” he said. “As long as the booze is flowing, and the checks are clearing, no one says, ‘Hey where is this money coming from?’”

In an interview, Suarez said he always knew it might take time for new technologies to succeed.

“In my view, the fact MiamiCoin didn’t really work is not different than how FTX collapsed,” he said. “These technologies are good ideas, but they don’t always work.”

Still, when it comes to crypto, Miami’s relationship with blockchain technologies is just really getting started.

“I call them tsunamis of opportunity,” Suarez said. “And we have two options. We can take out a surfboard and surf the wave like a tsunami. Or we can hide and try to run from it and pretend it’s not there and potentially get washed away.

“What do you think Miami is going to choose?”

correction

A previous version of this article misspelled the last name of Martin Nandy. The article has been corrected.

Loading...