Between 2020 and mid-2022, cryptocurrency fever gripped millions of people around the world. From the frozen deserts of Kazakhstan to the underground bars of Jakarta and places where many people don't or don't want to have bank accounts, the move to blockchain and Web3 has permeated every corner of the crypto ecosystem. People mine in Lebanon, trade in Indonesia, build infrastructure in Singapore and gamble in the Philippines, and their numbers are growing every week.
But in a year when Bitcoin prices hit an all-time high of $68,789, the world's obsession with cryptocurrencies has grown even more. In May, the Luna coin crashed, causing a chain reaction that destabilized trading and led to the collapse of memcoin; After that, the rules began to tighten, and the year ended with the collapse of the once reliable FTX exchange.
Around the world, dozens of traders, miners and investors were interviewed across Asia, from Almaty to Singapore, who were eager to participate in the cryptocurrency boom of the past year. Speaking to the world again in December, they expressed regret and confusion, although there were threads of optimism from those still dreaming of trade.
At the end of 2021, cryptocurrency miners took control of the outskirts of Kazakhstan. The "small toys", as the small owners are called in this country, are connected to the electricity grid in their garden. The big players, whose factories are filled with processors producing cryptocurrencies, are smoking the frozen, unstoppable horizon.
Currently, miners are affected by power outages and falling cryptocurrency prices. In January, Kazakhstan's government cut domestic electricity to miners due to widespread power shortages, then rationed them with expensive electricity imported from Russia.
"Almost all legitimate miners have restricted their activities," Din-Mukhammed Matkenov, founder of a major BTC miner KZ, told Rest of the World . "Russia has not always provided a stable energy supply."
In February, BTC KZ plans to move to Russia or Latin America. This never happened. Instead, workers are now dismantling parts of the massive installation to be reinstalled or sold for spare parts. BTC KZ is not alone; Local newspapers reported that other miners were doing the same.
Miners that continue to operate are taking losses, hoping to hang on until the value of the cryptocurrency recovers. Mining farms can now only operate during off-peak hours on weekdays, from midnight to 9 a.m., Matkenov explained, and around the clock only on weekends. The prices they pay for Russian electricity are much higher than the prices for domestically produced electricity.
Marat, a backyard miner, recently shut down his mining operations to focus on real estate speculation. He told the world that he expects the Ethereum price to reach $1,900 if mining continues. "Otherwise we will sell our GPUs to gamers," said Marat, who asked to remain anonymous because he was illegally tapping the power supply. "At today's prices, it's not worth it." (Marat was unaware that Ethereum had not been available for mining since September, as he later told Reste du Monde .)
Miners in Kazakhstan feel uneasy as the government puts pressure on them in terms of income. There is currently a tax on electricity consumption, which is expected to increase tenfold by January 2023; an additional value added tax on imported mining equipment and a corporate income tax on the value of mined cryptocurrency. A new law passed by the lower house of parliament this month will require companies to pay for permits and buy electricity through centralized auctions.
"The president of Kazakhstan called investors to come to Kazakhstan," complains Matkenov, "and on paper everything turned out positive. But the reality is different."
This reality is also happening in Indonesia. A year ago, it was easier than ever for Indonesians to join the cryptocurrency wave: with just 75 cents and a smartphone, anyone could launch a trading app. Between 2020 and 2021, the value of cryptocurrencies in Indonesia increased more than 10 times, reaching 50 billion dollars.
In November 2021, the rest of the world spoke to Jakarta-based independent musician Ananda Badudu, who was a major Twitter NFT crypto creator at the time. Although he lost money, he told the world that he believed the banking revolution had just begun.
But in December 2022, Badudu's idealism crumbles. His investment evaporated after the Celsius stock market crash, which in turn was weakened by the extreme failure of Do Kwon's Moon coin.
"At this point, I don't know if this is just a scam or a legitimate investment," a confused Badudu told Rest of the World . He still has money on the Binance exchange, but he doesn't keep track at all because of his frustration. He declined to say how much he lost.
"At this point, I don't know if this is just a scam or a legitimate investment."
"There are a lot of dubious cryptocurrency companies popping up, but there are no laws or regulations to control them," he said. “I'm not saying that investing in [traditional] currencies like Ethereum or Bitcoin is wrong... We know the risks. But as more and more cryptocurrencies crash, this whole investment becomes downright predatory.
Previously active cryptocurrency Telegram channels used by traders in Indonesia are now filled with spam. Antonny Teo, the founder of the Kryptonesia channel, one of Indonesia's largest communities, told the world that he has lost about 50% of his subscribers since the peak of his membership, which is now about 7,000.
Agus Artemis, the founder of the Cryptoiz community, whose largest Telegram channel has more than 13,500 subscribers, told the Rest of the World that "cryptocurrency winter" has turned into a game of survival of the fittest. Trusted coins will likely survive, while coins considered "junk" will disappear. (Artemiss still believes this; now is the time to invest because prices are depressed, she says.)
In local media, Chenmi Mulyanto, vice president of development at Tokocrypto, Indonesia's most popular exchange recently acquired by industry giant Binance, noted a sharp drop in daily trading volume. Mulyanto said trading volumes are "typically" between $50 million and $70 million per day. By July of this year, that range had fallen by about two-thirds to between $15 million and $20 million.
Official records are contradictory, but Mulyanto's statement is still taken into account. Bappebti, Indonesia's investment regulator, counted around 16 million cryptocurrency investors in the country as of August. The Ministry of Commerce said that this figure continues to rise, accompanied by a drop in the cost of trade by more than 50%.
Last year, fueled by the hype surrounding cryptocurrencies, the Indonesian government planned to launch an exchange specifically dedicated to cryptocurrencies. Today they have extended this period and, as in Kazakhstan, are adding taxes and regulations to the sector.
In May this year, the government introduced a value added tax (VAT) of 0.1% on cryptocurrency transactions made on CoFTRA-registered platforms and 0.2% on unregistered platforms. In September, the government announced plans to require two-thirds of board members and commissioners of cryptocurrency exchanges to be Indonesian citizens and residents of the country.
0.1% Latest Value Added Tax on cryptocurrency transactions on platforms registered with Bappebti, the Indonesian investment regulator.
The atmosphere in Singapore is tense. In 2021, when China banned all cryptocurrency activities, many wondered if Singapore would become the new haven for traders and exchanges. This public statement is very open to the public, independent of cryptocurrencies.
However, the signals are mixed. The bourse complained that the regulator, the Monetary Authority of Singapore (MAS), was slow in issuing approval. Of the hundreds of applications submitted by the exchange since the licensing law came into force in January 2020, only 10 applications have been fully accepted.
Many are moving to Dubai following promises of a supportive cryptocurrency policy. Those still living in Singapore remain concerned, worried about compliance with existing rules and reluctant to introduce new ones, trade lawyer Hari Veluri told Rest of the World .
For Singaporeans in general, the fall of FTX has had a very bad impact. In autumn 2021 and winter 2022, the Singapore government invested up to $275 million in the stock market through the Temasek government investment fund.
Four investors who spoke to Rest of the World said they use FTX because of its intuitive interface and wide offering of cryptocurrencies. But more importantly, they use it because it's the only major exchange available to them. (Competitor Binance was shut down by MAS in late 2021. Binance withdrew its license application after reporting a failure to meet regulatory standards against money laundering and terrorist financing.)
"[The government] is forcing us to use FTX if we want to use the big exchanges," Ferris Frederick Francis, 24, co-founder of Singapore-based NFT project Cryptobengz, told Rest of the World . He said his confidence had grown thanks to Temasek. “If you see your government investing so much money in a company, [you think] it doesn't matter. »
Sean, a limited liability investor who requested a pseudonym because of his ties to Temasek, told Rest of the World that he used his FTX account as a "piggy bank," pooling investments and cashing them out need. When FTX collapsed in early November, it lost more than 50% of its capital. He found it without much fanfare while on vacation with his family.
“If you see your government investing so much money in a company, [you think] it doesn't matter. »
"I've lost more than any of my friends," he said. "I was very disappointed. It made me question my judgment of the character.
Kenneth Bock, a consultant at Web3 in Singapore, believes the collapse of FTX will lead to a bigger change than the collapse of MAS. “[Exchanges] have to comply with regulations, risks, safeguards, disclosures – things that have been difficult to overcome [since their inception],” he told Rest of the World.
However, there is a part of the cryptocurrency caravan that keeps moving. In late November, The Straits Times reported that some Singaporeans had regained access to trading on the Binance app, despite earlier restrictions by the authorities. Earlier that month, Binance announced that it had acquired the Sakura exchange, making it one of the leading cryptocurrency trading platforms in Japan. On December 19, CoinDesk Indonesia announced that Binance has begun the full acquisition of Tokocrypto, Indonesia's largest exchange.
David Lee, professor at the Center for Inclusive Financial Technology (NiFT) at the Singapore University of Social Sciences, believes that cryptocurrencies can fulfill their original promise as a balancing force. He told Rest of the World that there are two different groups of players: the Web3 and Web2 projects, which claim to be something more advanced.
"The Web3 space continues to grow in the [economic] space," he said, "and [retail players] continue to be fooled by fake Web2."
Adi Renaldi reported for this article from Jakarta and Nicole Lim from Singapore.
Update: This story has been updated to clarify that Ethereum mining ceased in September 2022.
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