The latest gem snatched from Sam Bankman-Fried’s crypto empire

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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 outlets. He was a member of the team that won the 2019 Pulitzer Prize for Public Service for the South Florida Sun Sentinels’ coverage of the mass shooting at Marjory Stoneman Douglas High School. The opinions expressed here are his own. Read more reviews on CNN.

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Thanks in large part to the evangelization of bitcoin by top Miami officials, the city has spent the past two years in full-blown cryptomania.

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

Two years ago, Miami released its Bitcoin white paper, a blueprint for its transformation into a 21st century city. Around the same time, prominent crypto figures started moving into the city, and Miami began selling its own digital currency, MiamiCoin.

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

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

This partnership, which is not even two years old, ended last week. On Wednesday, the embattled company and Miamis local government finalized an agreement to terminate the agreement and remove the now tarnished FTX logo from the sports venue.

Over the past few months, as the scale of the alleged Bankman-Frieds fraud has become clear, some elders in the city and the business community have been scrambling to unravel what many of us have suspected all along. to be a simply terrible business affair. Bankman-Fried, who maintained his innocence, pleaded not guilty to federal fraud charges during a New York court appearance earlier this month.

We now know how Miami’s love affair with crypto has been a fiasco. The financial costs of last year’s crypto crash were enormous for the thousands of investors who invested and then lost funds they could not afford to give up.

But my own reservations were not rooted in the certainty that the crypto would crash, although its crash was much faster and more dramatic than even most skeptics expected.

My opposition to crypto is based on its deleterious effects on the environment. That Miami, considered the most vulnerable major coastal city in the world, is going all-in for a currency created by climate-devastating technology has always struck me as a particular kind of madness.

Many people don’t understand how a currency that largely exists in the digital space can have real destructive effects on our environment. Bitcoin mining uses large amounts of resources. As New Yorker Elizabeth Kolbert wrote in an April 2021 article, bitcoin mining operations around the world now use approximately the annual electricity consumption of the entire Swedish nation.

Citing the website of data scientist Alex de Vries Digiconomist, Kolbert reported that a single bitcoin transaction uses the same amount of energy as the average US household consumes in a month. Similar reports could be found in The New York Times, The Washington Post and CNN.

Bitcoin mining hardware has intensified as the popularity of cryptocurrencies has increased. Between January 1, 2016 and June 30, 2018, mining operations of four major cryptocurrencies released an estimated 3 to 15 million metric tons of carbon dioxide, according to a study published in the research journal Nature Sustainability.

Even China, the world’s biggest polluter, banned bitcoin mining in 2021, citing its high carbon emissions. We are now in what has been called the crypto winter after enthusiasm plummeted for cryptocurrencies around the world. Nevertheless, the carbon footprint of bitcoin, still the most valuable digital currency in the world, continues to be enormous.

Last September, a report from the White House Office of Science and Technology Policy found that crypto mining in the United States was emitting as many greenhouse gases as national railroads and warned that in depending on the energy intensity of the technology used, crypto-assets could hamper broader efforts to achieve net-zero carbon pollution in line with U.S. climate commitments and goals.

But despite all this data, Suarez remains convinced that it is possible to produce bitcoin in an ecological way.

I would like to sort of dispel some of the myths, I think, which I call the myths of [crypto] mining as an environmentally unfriendly activity, the mayor said during his Crypto Conference, a live-streamed event held in June 2021.

And because there are renewable sources of energy in South Florida, according to his argument, crypto miners could eventually be incentivized to stop contributing to the destruction of our planet. He argued, in effect, that because renewable energy sources exist, miners may in the future choose to use them. This is an extraordinarily weak argument. That would be a wonderful outcome, if only we could get bitcoin miners interested in giving up their search for cheap and dirty power sources.

But he’s not wrong, it’s entirely possible to mine bitcoin responsibly, as bitcoin’s main 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 Merge in September.

Essentially, Ethereum has moved to a mining process, known as proof-of-stake, which requires far less computational power than bitcoiners’ preferred process, proof-of-work. In doing so, Ethereum appears to have reduced its global 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 the proof-of-stake system for fear it will eat away at their profits. Meanwhile, Miamians seem torn on environmental issues. According to a survey by Yale University, as well as George Mason University, they believe local officials and state officials, including the governor, should be doing more to fight global warming.

But voters in Miami helped propel a red tide that installed Republican supermajorities in both houses of the Florida Legislature, a body that, under GOP control, allows fossil fuel companies to write their bills.

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

And despite everything that has happened with the fall in value of digital currencies, Suarez, who is also the president of the United States Conference of Mayors, remains a bitcoin enthusiast.

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 bitcoin, as he has since November 2021.

Some dreams, it seems, die hard.

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