:max_bytes(150000):strip_icc()/2023-11-08104741-8582d6597e964a668ba6c9ba16bb9a0b.jpg "2023: The year of crypto volatility")
Cryptocurrencies have been around for more than a decade, but they have become ubiquitous in recent years. The financial platform appears to have reached its breaking point in 2023, which appears to be an up-and-down year for cryptocurrencies.
There are many stories of people who started from nothing and became millionaires investing in cryptocurrencies, and most of them are recent. However, for every one of these stories, there are also headlines on the other side of cryptocurrency involving fraud, prisons, and environmental issues. Here are some of the highs and lows of cryptocurrencies in 2023.
Sam Bankman Fried and FTX
No mention of the “Year of Cryptocurrency” would be complete without Sam Bankman Fried, founder of the defunct cryptocurrency exchange FTX. Bankman-Fried launched his company in 2019 and eventually became one of the biggest players in the industry. At its peak, FTX was valued at $32 billion.
Sign up for a week
Avoid your echo camera. Get the facts behind the news, and analyze from multiple angles.
Subscribe and enjoy
Subscribe to our free weekly newsletter
From our morning briefings to our weekly Welcome newsletter, get the week's best stories delivered straight to your inbox.
From our morning briefings to our weekly Welcome newsletter, get the week's best stories delivered straight to your inbox.
The company's success made Bankman Fried very wealthy. In September 2022, a month before FTX's collapse, Forbes estimated his net worth at $17.2 billion, and he became "a prominent figure in the cryptocurrency industry, becoming one of the richest people by the age of 30."
However, there was a dark story behind FTX's success, and the company began to unravel when the Securities and Exchange Commission began investigating allegations of a massive Ponzi scheme run by Banker-Fried. FTX filed for bankruptcy in November 2022. Bankman-Fried was eventually charged with securities violations, fraud, and conspiracy. In 2023, additional information was released showing that FTX defrauded its investors of at least $10 billion. Bankman-Fried was convicted of seven charges in a New York court last November, faces decades in prison, and is scheduled to be sentenced in March 2024. Time has told.
Environmental issues
Cryptocurrencies have long been anathema to environmentalists, who are concerned about the waste generated by the production of cryptocurrencies. While all cryptocurrencies pose environmental risks, Bitcoin is a popular option that has made headlines this year.
The dispute first came to light in 2021, when the state of Texas paid Bitcoin's parent company $18 million to shut down computers during a winter storm so electricity could be diverted to the grid. While power plants struggled to keep running, these “bitcoin mines” were used to power the homes of thousands of cryptocurrency traders. Despite the damage caused by this blackout, Bitcoin mining remains popular across the country. In April of this year, a New York Times investigation found that it had “identified 34 large-scale operations in the United States, all of which strained the power grid, and most of which found new ways to take advantage.”
These mines “can create costs, including high electricity bills and massive carbon pollution, for everyone in the neighborhood, many of whom have no interest in Bitcoin.” The Times reported that a mine in Dalton, Georgia, “uses as much energy as 97,000 nearby homes.” The largest Bitcoin mine in the United States is located in Rockdale, Texas, and “uses the same amount of electricity as the nearest 300,000 homes,” the Times wrote. The industry appears to be growing, and taxpayers in Texas and elsewhere are footing the bill.
Activities and stress
Despite the many negative stories, 2023 was not all bad in the world of cryptocurrencies. Many argue that cryptocurrencies remain a profitable investment, and despite their volatility, there is some data to back them up.
Reuters reported that several cryptocurrency-related stocks rose in early December “amid expectations of lower U.S. interest rates and renewed momentum as traders bet that U.S. regulators will soon approve Bitcoin Cash exchange-traded funds.” Bitcoin shares hit a 20-month high of $42,000 per share. Reuters added that the coin appeared to "[remove] the gloom that prevailed in the cryptocurrency market after the FTX collapse and other failures in the cryptocurrency industry."
The letter also stated that the cryptocurrency industry is “on track to set a new record for federal lobbying spending.” Major cryptocurrency companies spent $18.96 million on lobbying in the first three quarters of 2023, compared to $16.1 million during the same period in 2022, according to Reuters. So, while cryptocurrency is generally controversial, its financial highs and lows are smooth.