Crypto leaders must grow up or go the way of FTX, says Riot Blockchain leader

The highly publicized collapse of crypto platform FTX is a wake-up call for crypto leaders to act more professionally, says one of crypto’s most prominent leaders in North Texas.

Chad Harris, chief commercial officer of Riot Blockchain, which is building North America’s largest bitcoin mining facility in Corsicana, gave advice to crypto entrepreneurs at the Texas Blockchain Summit in Austin last week.

“I can beat your feelings when I say this,” he told the audience. “I can see the future. And some people in this room and across the industry might not be into it.”

His comments come after FTX, once the world’s second-largest crypto exchange, filed for bankruptcy protection earlier this month, raising further questions about the legitimacy and long-term viability of the crypto industry.

“The bad behavior with bad management, bad cash planning, all those things that turn into bankruptcy … every time that happens, it makes it harder for the rest of us,” he said. “And that makes it hard for the public to trust us again.”

Harris mentioned in his speech that there were fewer people in the audience at the summit this year, the first since the crypto crash in November 2021. The price of Bitcoin has fallen 73% in the past year to $15,786.

“Two years ago, this audience was packed,” he said. “Today, this is an audience full of passionate people who believe they can actually facilitate what they tell the public. I think it’s important because every time one of us fails in a catastrophic way, it affects every single one of us in this room.”

Advice for crypto leaders

Harris said bad actors, poor cash management and a difficult business environment will continue to weed out crypto industry players like FTX. Harris took another dig at FTX, which owes more than $3 billion to its 50 largest creditors, by saying his company was smart enough not to take on debt.

“Some of the things we did that others haven’t is that we stayed very, very lean along the way,” he said. “We didn’t take on any debt. We did not hire contractors. We built a team of passionate people who believed in the core value of our business.”

Harris also said he attributes Riot’s success to hiring more than 500 employees. Sam Bankman-Fried, the founder and CEO of FTX who resigned on Nov. 11, the same day FTX filed for bankruptcy, opposed hiring more team members and preferred to retain a staff of about 300.

Harris said tax cuts and tax credits allowed Riot Blockchain to hire a large team. And Rockdale, the site of its 700-megawatt plant, is collecting more in sales tax than ever before, he said.

Crypto executives also need to stop overinflating claims about the capacity of their facilities, Harris said. “If we don’t start providing expectations that are actually facts, that we can stand behind and actually deliver, we’re going to continue to have elected officials be so concerned,” he said.

Companies must work to get local communities on board with their projects, including earning the support by at least one local elected official, he said.

Harris admitted this hasn’t always worked out for him, citing a group in Corsicana that continues to protest the construction of the new facility. The 265-acre site, about an hour south of Dallas, is expected to begin operations in July and will have an initial capacity of 400 megawatts. The opposition says that the facility takes resources from the community of around 5,300.

“You’ll hear me joke about the Chad Harris haters club,” Harris said. “It’s a real thing.”

But, Harris said, as his company continues to make donations to the community and hire local employees, the pressure from the “haters” is lessening.

Finally, Harris told the entrepreneurs to do their homework and take advantage of the job incentives that Texas provides, such as funding to create training programs.

Execs need to grow up

The outspoken executive said the FTX bankruptcy is a clear sign that the cryptocurrency industry needs to change and change fast.

“If you look at the industry today, it’s unraveling at a record pace that’s almost unimaginable,” he said. “Bitcoin was more than $60,000 and everyone was driving Lambos and flying and hanging out on yachts. And let me tell you something, it’s a much different world.”

Harris said the industry should be beyond the initial startup phase. Crypto companies pay rent and wages like all legitimate businesses do and must behave as such, he said.

“Beer caps and T-shirts, those days are gone,” he said. “We should be in trousers and sports coats. We should be in suits. This is a professional business. This is billions of dollars. We are creating an opportunity for generational wealth.”