Opinion: Miami is one step closer to imploding its crypto dreams

Editor’s note: Jake Cline is a Miami-based writer and editor whose work has appeared in the Washington Post, The Atlantic and other national newspapers. He was a member of the 2019 Pulitzer Prize-winning team for the South Florida Sun Sentinel’s coverage of the mass shooting at Marjory Stoneman Douglas High School. The opinions expressed here are his own. Read more opinions on CNN.



CNN

Thanks in large part to the evangelization of bitcoin by Miami’s top officials, the city has spent the past few years in full cryptomania.

In the vision of Mayor Francis Suarez—the city’s chief proponent of digital currency—Miami will one day become the nation’s cryptocurrency capital.

Jake Cline

Two years ago, Miami published its “Bitcoin White Paper” – a blueprint for its transformation into a 21st century city. Around the same time, prominent crypto personalities began moving to town, and Miami began selling its own digital currency, MiamiCoin.

As the fever picked up, cryptocurrency exchanges began advertising on billboards in Miami. Bitcoin ATMs are set up at neighboring gas stations and convenience stores.

And perhaps the most visible symbol that allowed Miami to change its crypto bragging rights was Miami-Dade County’s announcement in March 2021 that it had sold the naming rights to its major sports arena—home of the NBA’s beloved Miami Heat franchise—to FTX, now a bankrupt cryptocurrency exchange founded by disgraced crypto entrepreneur Sam Bankman-Fried.

That partnership, which is not even two years old, came to an unfortunate end last week. On Wednesday, the beleaguered company and Miami’s local government finalized an agreement to terminate the contract and remove the now-tarnished FTX logo from the sporting event.

Over the past few months, as the extent of Bankman-Fried’s alleged fraud has become clear, some city elders and the business community have sought to expose what many of us suspected from the beginning was simply a terrible business deal. Bankman-Fried, who maintains his innocence, pleaded not guilty to federal fraud charges during a New York court appearance earlier this month.

Now we know what a fiasco Miami’s love affair with cryptocurrency was. The financial costs of last year’s cryptocurrency crash were huge for many thousands of investors who invested – and then lost funds they could hardly part with.

But my own reservations weren’t rooted in the certain knowledge that cryptocurrency would collapse, even though its collapse was far faster and more spectacular than most skeptics expected.

My opposition to cryptocurrencies is based on their harmful effects on the environment. The fact that Miami, billed as “the most vulnerable major coastal city in the world,” would go all in for a currency created by climate-destroying technology has always struck me as a special kind of insanity.

Many people don’t understand how a currency that exists mostly in the digital space can have a real-life destructive impact on our environment. Bitcoin mining uses huge amounts of resources. As Elizabeth Kolbert of the New Yorker wrote in an April 2021 article, “Bitcoin mining operations around the world now use … roughly the annual electricity consumption of all of Sweden.”

Citing scholar Alex de Vries’ Digiconomist website, Kolbert reported that “one bitcoin transaction uses the same amount of energy as the average American household uses in a month.” Similar reports can be found in The New York Times, The Washington Post and CNN.

Bitcoin mining hardware has grown as the cryptocurrency has grown in popularity. Between January 1, 2016 and June 30, 2018, mining operations for four major cryptocurrencies released an estimated three to 15 million metric tons of carbon dioxide, according to a study in the research journal Nature Sustainability.

Even China, the world’s biggest polluter, has banned bitcoin mining in 2021, citing its high carbon emissions. We are now in what is being called “crypto winter” after enthusiasm for cryptocurrencies worldwide has waned. Despite this, the carbon footprint of bitcoin, still the most valuable digital currency in the world, remains enormous.

Last September, a report from the White House Office of Science and Technology Policy found that crypto mining in the United States emits as many greenhouse gases as the nation’s railroads and warned that “depending on the energy intensity of the technology used, crypto-assets could hinder broader efforts to achieve zero carbon pollution in line with America’s climate commitments and goals.”

But despite all this data, Suarez is still convinced that it is possible to produce bitcoin in an environmentally friendly way.

“I would like to sort of dispel some of the, I think, myths – I call them myths – o [crypto] mining as an activity that is not environmentally friendly,” the mayor said during his Crypto Conference, a live-streamed event held in June 2021.

And since there are renewable energy sources in South Florida, he argues, crypto miners may eventually be encouraged to stop contributing to the destruction of our planet. He actually argued that miners might decide to use them in the future, since renewable energy sources exist. That is an extremely weak argument. It would be a wonderful outcome, if only we could interest bitcoin miners to give up their search for cheap and dirty sources of energy.

But he’s not wrong – it’s entirely possible to mine bitcoin responsibly, as bitcoin’s leading competitor, ethereum, proved last year. A decentralized global network used to verify billions of dollars in cryptocurrency transactions, ethereum completed a system-wide transformation known as a merge in September.

Essentially, ethereum has switched to a mining process, known as proof of stake, which requires significantly less computing power than bitcoiners’ preferred process, proof of work. In doing so, ethereum appears to have reduced its worldwide energy consumption by more than 99%.

While some bitcoin miners say they want their industry to go green, most are resisting calls to adopt a proof-of-stake system for fear it would cut into their profits. Meanwhile, Miami residents seem torn on environmental issues. According to research conducted by Yale University as well as George Mason University, they believe local and state officials, including the governor, “should be doing more to address global warming.”

But Miami voters helped set off a “red wave” that installed Republican super-majorities in both houses of the Florida Legislature — the GOP-controlled body that allows fossil fuel companies to write their own bills.

Miami-Dade County residents last November also voted to re-elect Gov. Ron DeSantis, who said that while he doesn’t consider himself a “climate change denier,” he hopes to never be mistaken for a “climate change believer.”

And despite everything that has happened with the digital currency’s decline, Suarez, who is also the president of the United States Conference of Mayors, remains a bitcoin believer.

Miami-Dade County will once again host Bitcoin 2023, the next installment of the annual conference, later this year. And Suarez told a Miami TV station that he continues to receive his government salary in bitcoins, as he has since November 2021.

Some dreams, it seems, die hard.

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