Opinion: Miami is one step away from the implosion of its cryptic dreams

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


Thanks in large part to bitcoin evangelism by high-ranking officials in Miami, the city has spent the past two years fully immersed in the world of crypto.

In the vision of Mayor Francis Suarez – the city’s chief digital currency fan – Miami will one day become the national capital of cryptocurrency.

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

As the fever picked up, cryptocurrency exchanges started advertising on billboards in Miami. Bitcoin ATMs have been installed at nearby gas stations and convenience stores.

And perhaps the most obvious symbol that Miami has been allowed to show off its crypto-bragging rights is Miami-Dade County’s March 2021 announcement that it sold the naming rights to its flagship sports arena — home of the beloved Miami Heat NBA franchise — to FTX, the now-bankrupt cryptocurrency exchange the entrepreneur founded. Cryptologist Sam Bankman-Fred.

That partnership, not even two years old, came to an unhappy end last week. On Wednesday, the embattled company and the local government in Miami finalized an agreement to end the deal and remove the now-faded FTX logo from the sports field.

Over the past few months, as the scale of the alleged Bankman-Fried fraud became apparent, some of the city’s elders and business community scrambled to get rid of what many of us suspected from the start was just a terrible business deal. Bankman Fried, who has maintained his innocence, pleaded not guilty to federal fraud charges during his court appearance in New York earlier this month.

We now know just what Miami’s love affair with cryptocurrency has been. The financial costs of last year’s cryptocurrency crash were enormous for the thousands of investors who invested – and then lost money they could not afford.

But my own reservations weren’t rooted in a certain knowledge that the cryptocurrency would crash, even though its crash was much faster and more dramatic than even the most skeptics had predicted.

My opposition to cryptocurrency is based on its harmful effects on the environment. The fact that Miami, billed as “the most vulnerable major seaside city in the world,” would go all in for currency generated by climate-damaging technology always seems to me to be a special kind of madness.

Many people do not understand how a currency that exists largely in the digital space can have devastating real-life effects on our environment. Bitcoin mining uses huge amounts of resources. As Elisabeth Colbert of New York wrote in an article in April 2021, “Bitcoin mining operations around the world now use…about the annual electricity consumption of the entire nation of Sweden.”

Quoting Digiconomist data scientist Alex de Vries, Kolbert reports that “a single Bitcoin transaction uses about the same amount of energy as the average American household does in a month.” Similar reports can be found in the New York Times, Washington Post and CNN.

Bitcoin mining hardware has increased along with the popularity of the cryptocurrency. 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 published in the research journal Nature Sustainability.

Even China, the world’s largest polluter, banned bitcoin mining in 2021, citing its high carbon emissions. We are now in the so-called “crypto winter” after waning enthusiasm for cryptocurrencies across the world. Still, the carbon footprint of bitcoin, which remains the most valuable digital currency in the world, is still massive, however.

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

But despite all this data, Suarez is still convinced that bitcoin can be produced in an environmentally friendly way.

“I would kind of dispel some myths, I think, — I call them myths — of [crypto] “Mining as an activity is not very environmentally friendly,” the mayor said during the Crypto Conference, a live event in June 2021.

And because there are renewable energy sources in South Florida, he argued, crypto miners could finally be incentivized to stop contributing to the destruction of our planet. He has argued, in fact, that because renewables exist, future miners may choose to use them. It’s a very weak argument. It would be a great outcome, if only we could interest bitcoin miners in abandoning their pursuit of cheap and dirty energy sources.

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 in September completed a system-wide transformation known as Merge.

Essentially, ethereum has transitioned to a mining process, known as proof of stake, which requires far less computing power than bitcoin’s preferred process, proof of work. By 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, the majority are resisting calls to adopt proof of quota because of concerns that it could eat into their profits. Meanwhile, Miamians seem to be torn on environmental issues. According to a survey by Yale University, as well as George Mason University, they believe local and state officials, including the governor, “should do more to address global warming.”

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

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

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

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

Some dreams seem to die hard.

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