December 6, 2022 World
It was the spring of 2021, and Miami’s hottest night clubs were inundated with phone calls from cryptocurrency entrepreneurs that no one had heard of. They wanted to reserve lots of tables — or rent an entire venue for a whole evening at a cost of half a million dollars or more.
With the price of bitcoin then at $60,000 and crypto becoming mainstream, its biggest beneficiaries descended on the Florida city to flaunt their wealth at lavish parties.
“Out of the blue, all these kids from crypto started coming down and spending a lot of money — like, an insane amount of money,” said Andrea Vimercati, director of food and beverage at Moxy Hotel group.
“They were booking tables for $50,000, and it was like, who the hell are these people,” added Vimercati, former director of Groot Hospitality, which operates some of the hottest night clubs in Miami including Liv, Story and Swan.
The new partygoers were “95 per cent men, young . . . with a kind of nerdy style,” he said. “You couldn’t tell they had a lot of money if they were just walking around.”
A little more than a year later, the phones have stopped ringing after the collapse of Bahamas-based exchange FTX roiled the market and cast a pall over the industry. The crypto revellers frequenting Miami’s clubs have “completely disappeared”, Vimercati said.
Those on the dance floor had behaved as though there was no tomorrow. In the event, it turns out they might have been right. “They wanted to show that they didn’t have any limits,” recalled Vimercati. “They were ordering 12 or 24 bottles of the most expensive champagne and just showering themselves without even drinking.”
In June last year, one group who claimed to have just sold their cryptocurrency company celebrated the windfall at E11even, a neon-lit night spot with troupes of trapeze dancers and burlesque shows. “50 Cent was performing, and their spend was more than a million dollars,” said Gino LoPinto, operating partner at the club. “They paid in crypto.”
LoPinto recalled: “They had bathtubs of champagne brought out, and gave 50 Cent a bunch of cash to throw.”
E11even started accepting payment in cryptocurrency in April 2021. The club processed more than $6mn worth of transactions last year. But in the past three months, the club has processed less than $10,000 — “a monster, huge fall”, he said.
The crypto crowd were keen to boast about their newfound wealth, said LoPinto, who described how clientele would prove how rich they were by opening up the crypto wallets on their smartphones.
“You wouldn’t normally show your bank account, but people do show their crypto wallets,” he said. “I’ve seen more crypto wallets in a year than I’ve seen bank accounts in a lifetime.”
The never-ending parties underscored Miami’s status as the epicentre of the US cryptocurrency industry. Florida’s low taxes were a big draw, as were less-onerous Covid-19 restrictions that turned the city into a magnet for revellers.
In March 2021, FTX paid $135mn to secure 19 years of naming rights for the arena where basketball team Miami Heat play. In June 2021, the Bitcoin Conference was held in Miami after relocating from Los Angeles.
Miami’s club operators have always been able to rely on a few big weekends, such as Art Basel, music festival Ultra and New Years Eve. But for the past two years, attendees at bitcoin events have demanded as many tables and in some instances have bought out entire venues to throw private parties.
“On the bigger crypto weekends, the groups coming in for private buyouts were these young tech guys,” said Alan Roth, owner of Rosa Sky rooftop lounge. “A buyout costs anywhere from 20 per cent to 50 per cent more than we would make on a normal night.”
Crypto money had flooded into other parts of Miami’s luxury scene too. “They bought big houses for $25mn plus, they rented big yachts . . . they had money and were spending it lavishly,” said Brett Harris executive director of luxury sales at real estate firm Douglas Elliman. “They were buying big houses in cash, no financing — converting Bitcoin into cash to buy.”
“It was revenge of the nerds,” said Harris, adding that crypto entrepreneurs wanted to buy properties for entertaining with home movie cinemas and water features.
Michael Simkins, chief executive of E11even’s cryptocurrency operation in Miami said: “The money came rather quickly for a lot of them, and it’s easier to spend it when it comes quickly.”
Roth is hopeful that the latest source of demand for Miami’s luxury lifestyle will return. “I don’t think the crypto market is going to fold and be done. It’s like the regular market — it goes up and down. I don’t get the sense that they’re afraid.”
Not everyone agrees. “We don’t think they’re coming back,” Vimercati said.