As bitcoin plunges, Miami vows to hold on to its crypto dreams

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

The value of bitcoin has fallen, 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 the meltdown of the crypto exchange FTX has had ripple effects here.

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

The collapse of crypto has emboldened Suarez’s critics, who say the industry’s nose-dive reinforces their view that Miami has, once again, recklessly staked part of its future on unproven technology and shaky finances. There are also concerns about 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 artists selling imaginary coins and magic beans is not an interesting story,” said Billy Corben, a documentary filmmaker and longtime skeptic of Suarez’s embrace of bitcoin. “But the fact is that the government and its elected officials were complicit in it and dragged the city into it.”

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

Instead, they are ensuring the city gets through what is becoming known as a “crypto winter” in the belief that bitcoin will return and help redefine the city as a hub for creativity, finance and technology.

At Miami’s signature art fair earlier this month, crypto-fanatics flocked to raucous parties and exhibitions. The event, Art Basel, draws celebrities, artists and locals to Miami every December, mixing digital currencies and art throughout.

Digital firm Tezos offered visitors to its exhibit inside the Miami Beach Convention Center the opportunity to stamp their own artwork on the blockchain. Over Biscayne Bay in the city’s opulent design district, the Institute of Contemporary Art hung a physical replica of a non-fungible token (NFT) from the CryptoPunks collection. The image showed a pixelated depiction of a woman named after Miami’s iconic area code 305 – and was placed next to Andy Warhol’s “American Lady”.

As fairgoers looked at 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 cryptocurrencies.

“We have CryptoPunks next to Warhols, and 18 months ago you wouldn’t even think about it,” said a man who collects and develops CryptoPunk artwork, and would identify himself only by his digital identity, CryptoNovo. “Miami remains a place that welcomes CryptoPunks into town.”

“All It Takes is a Hurricane”

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

He urged tech companies to ditch chilly San Francisco for perpetually hot Miami, offered to take his salary in bitcoin and considered paying city employees, too. He also launched MiamiCoin, a virtual currency created in partnership with nonprofit CityCoins. Thirty percent of the proceeds will go to Miami’s government — something 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 due to 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, it seemed that Suarez’s efforts were 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 lists 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’s bid to make Miami the blockchain and crypto capital of America is coming true,” the report’s authors concluded.

But there have always been weak spots in Miami’s path as a crypto capital. Skeptics note that the city is nowhere near an Ivy League school that could act as a funnel for tech workers. This concern was somewhat tempered during the pandemic as young workers flocked to Miami. Now the question is whether they will stay.

Simon Glenn, head of marketing for the Blockchain Center, a New York-based group promoting distributed ledger technology, said there was an “unspoken agreement” among many crypto industry pioneers to settle 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’s one of those cities where you can walk around the streets and just find somebody new and interesting that’s relevant to you,” he said. “But I don’t know if it continues.”

“Everyone including the mayor is betting they’ll stay,” added Glenn, 26, who commutes between New York and Miami. “But this is a grassroots community, and all it takes is one hurricane, literal or metaphorical, and everyone will run back to San Francisco or New York.”

“This is about a younger generation”

Raymond Yuan, founder and CEO of Singapore-based CTH Group, is a crypto-venture capitalist betting that 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” – who he sees thriving in Miami.

“For us, this [decision to move] was pretty simple,” 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 startups now deliberately try to avoid locating in Silicon Valley or Seattle, where they would have to work in the shadow of the big tech companies that built modern Internet applications.

“We’ve seen many stories in our history, when there’s a new technology cycle, the old giants try to assert their power and keep 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, CEO of Doodles, which allows users to own NFT graphics that resemble cartoon characters, moved the business to Miami in August. Holguin also remains bullish on both cryptocurrency and Miami’s future, telling the crowd at a recent summit that setbacks in the industry are actually a sign of growth.

“This is no different than any new technology that emerges in its very early days,” he said. “This technology that we’re trying to pioneer is going to have a much more positive impact in the long term than some of the heartache that people have been feeling lately.”

But after cryptocurrencies lost more than $2 trillion in market value in the past year, analysts warn that it will take time for the industry to recover.

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

“While I think we’ve had a big setback, I don’t think it’s nearly the end of the industry,” Talati said.

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

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

Nandy tries to use an NFT to stave off the rapid redevelopment of Miami’s historic Little Haiti neighborhood. After discovering that 17 buildings in the community are up for auction on December 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 purchase a song for $18.04 – a nod to Haiti’s independence in 1804.

If successful, Nandy says the building would be used for affordable housing or community events.

“In the cryptosphere, it is not impossible to sell 1 million NFTs in a few days,” he said. “And by doing that, we can make decisions as a community, and not just based on capitalism.”

“Tsunami of Opportunity”

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

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

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

Corben, who directed the hit documentary “Cocaine Cowboys,” compares Miami’s dream of getting rich in crypto to the city’s long history of embracing risky business ventures.

“Miami has no indigenous industry, and we go from hustle to hustle,” he said. “As long as the booze is flowing and the checks are disappearing, nobody’s saying, ‘Hey, where’s this money coming from?’

In an interview, Suarez said that he always knew that new technologies can take time to succeed.

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

Still, when it comes to crypto, Miami’s relationship with blockchain technologies is only 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 pick?”