May 20, 2022 - Technology

The crypto-pocalypse comes for MiamiCoin

Illustration of a palm tree over a yellow sun-like quarter

Illustration: Sarah Grillo/Axios

MiamiCoin, the first city-themed cryptocurrency, has lost nearly all its value over the past several months amid a broader crypto market collapse, Quartz reports.

Why it matters: Miami Mayor Francis Suarez hoped that the cryptocurrency, launched last summer, would help him raise revenue and reduce income inequality — and the eyes of other mayors were on the experiment.

  • But the currency's value has fallen more than 90% from its September high of $0.06, per Coinbase.
  • "Its rapid descent has burned investors on the way down, muting the dreams of Miami’s city leaders, and possibly raising red flags for regulators now investigating cryptocurrency transactions," according to Quartz.

Where it stands: Crypto boosters like Suarez view digital currencies as a way to augment traditional city revenue streams, like property taxes.

  • 30% of MiamiCoin miners' proceeds go to city coffers.
  • Miami did receive a $5.25 million disbursement from CityCoins — the company behind MiamiCoin — in February.

But the coin's subsequent collapse calls into question the long-term viability of such hopes.

  • Other crypto-curious cities like New York may back off their coin-related plans in light of MiamiCoin's struggles.
A screenshot of a tweet from the Mayor of Miami.
Twitter screenshot: @FrancisSuarez

The big picture: The U.S. Federal Reserve's recent interest rate hike, rising inflation and general economic gloom have combined to trigger sell-offs in all sorts of riskier assets, including cryptocurrencies.

  • Even the two most popular coins, bitcoin and ether, are down significantly compared with late last year — and if they're falling, relatively tiny and unproven coins like MiamiCoin don't stand a chance.
  • Other headline-grabbing crypto catastrophes, like the spectacular crash of the algorithmic stablecoin Terra, have only increased skepticism of the sector.

Miami has been trying to position itself as the geographic center of the crypto world, aiming to usurp San Francisco and New York's tech and financial primacy.

  • Last month, Miami hosted Bitcoin 2022 (a major confab for all things crypto and crypto-adjacent); the city's arts scene has been taken over by Bored Apes and other NFT-style work; and crypto venture deals there rose from $6 million in 2020 to $745 million in 2021, per Bloomberg.

But, but, but: The crypto market has crashed time and time again only to come roaring back weeks or months later.

  • Still, rising interest rates are likely to cool crypto-mania. And even if major coins like bitcoin or ether recover from the current dip, there's no guarantee a rising tide would lift all boats.

What they're saying: "Obviously the price is down significantly," Suarez told Fox News in February as MiamiCoin's value began plummeting. He remains committed to cryptocurrency — "I've never obsessed over the price, neither bitcoin nor MiamiCoin."

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