crypto strategy

Analysis | Miami’s Crypto Bet May Fail, But It Was Worth It

If you want to get a sense of how crypto sentiment has plummeted, look no further than Miami, which aspired to be the capital of digital currency. Gone are the laser eyes of Mayor Francis Suarez’s Twitter profile; the FTX sponsorship deal for the Miami Heat basketball stadium; and the wild dream of helping fund local government with altcoin proceeds instead of taxes (MiamiCoin, the token at the center of this wacky fantasy, has fallen about 99% since its peak.) The change in the The fate of crypto from a year ago is as tough in Miami as it is anywhere after Bitcoin lost three-quarters of its value and one of the world’s most iconic crypto exchanges fell headlong into the bankruptcy. But for Miami, it was a bet worth placing. Think of South Florida’s economic development model as akin to a venture capital portfolio. The VC model calls for making lots of small bets knowing that many will fail, but a few winners will bring exponential growth and extraordinary returns that they will pay for the losers in spades. For years, hype men and women in power have adopted such a strategy in the Magic City. Let’s turn the region into Wall Street South! Why not make it a tropical version of Silicon Valley? And the crypto capital? Individually, these ideas all started out as long shots, but they had asymmetrical top-to-bottom profiles; economies and regional governments have never had much to lose in South Florida, except perhaps the small hit to county revenue for the time it takes to find a new sponsor basketball stadium. But Miami is also winning lasting victories through this strategy, which is helping it diversify its local labor market beyond cyclical real estate and relatively low-paying leisure and hospitality. The Wall Street South bet, for example, has paid off in recent years with the arrival of billionaire Ken Griffin’s companies, Citadel and Citadel Securities. Blackstone Group Inc. added hundreds of jobs in the Miami area, while Elliott Management Corp. recently moved to West Palm Beach, developments that are not only significant in their own right, but will encourage other large companies to do the same. Miami’s hype machine sometimes got carried away. Suarez, who took the regional booster to a whole new level, acted recklessly in his decision to partner with the highly speculative MiamiCoin, a project based on a blockchain protocol called Stacks. The gimmick – or “innovation” – was that the city would get 30% of the proceeds from bids on MiamiCoin blocks, much like a lottery ticket that partially subsidizes the state government. The City of Miami didn’t create MiamiCoin — it was dreamed up by an organization called CityCoins — but Suarez gave it plenty of airtime, including on his YouTube show “Cafecito Talk,” and encouraged the city to accept the money. The MiamiCoin bidders might have thought they were in for a win-win for themselves and the city, but instead they lost 99 cents on the dollar, and the city ultimately ended up with a little extra currency. Suarez’s Relentless Shilling for Bitcoin only looks slightly better after its 77% decline; you wouldn’t expect a government official to use their position of influence to push specific actions or bonds on voters, and crypto has always felt equally inappropriate. But it’s not like the crypto winter has turned Miami into some kind of wasteland. Citadel’s Griffin just hosted an event with Suarez to announce his big plans for the area, and the financial district of Brickell is buzzing as cold weather rolls in for the rest of the country. Soon, South Florida will draw huge, well-heeled crowds for Art Basel Miami Beach in December, followed early next year by the Miami International Boat Show and the Food Network South Beach Wine and Food Festival. These flashy events don’t tell the whole story of the region’s economy, but neither will the inevitable images in the newspapers of the coming months of empty coworking spaces abandoned by some crypto devotees. It is important to consider the whole picture.

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