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California Companies Stop Using Bitcoin Following Crash of Cryptocurrency

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Since early May, the usage and investment in Bitcoin and other cryptocurrencies has plummeted worldwide. The most popular, Bitcoin, has gone from a high of a coin being worth $67,582 in November 2021 to under $50,000 in December, under $30,000 in April and, due to growing recession fears, the higher price of gas, crypto rig shutoffs in Texas due to the state’s energy mismanagement, environmental concerns over the amount of energy needed for the currencies, and numerous other factors, Bitcoin is now worth far below $20,000, hitting a low of $19,425 on Tuesday.

In California, the fall of cryptocurrency has been more acute, as the state attracted many early investors, especially in the early 2010’s when cryptocurrencies were in their beginning phases and were worth under $1,000. Investment from Silicon Valley companies and investors were a major part in the first spike of crypto growth in 2017, with many of the first crypto firms  also being established there in the earlier years.

“As crazy as the attitude of people shouting ‘This is the future’ or ‘This will make us all rich’ was in 2021, it was a lot more pronounced five years ago,” explained investment strategist Jerry Dawson to the Globe on Tuesday. “And yeah, Californian companies had the first ICOs (Initial Con Offering, similar to the more traditional Initial Public Offering in stocks), investors here put in money like crazy, and it really spread from here.”

But as cryptocurrencies began to show more and more vulnerabilities in recent months, much of that build up of optimism quickly crashed down. In recent weeks, especially after hackers stole hundreds of millions in cryptocurrencies from Californians and Californian companies, many in the Golden State have been moving away from them. Many businesses have even dropped Bitcoin, Ethereum, and other similar currencies as payment.

“I had to stop,” said Cesar Soto, a business owner in LA, to the Globe. “I would make a transaction one week, only for the value to fall the next when I traded it away. What really upset me was that a few even told me after their purchase that they were dumping their Bitcoin this way on businesses, like mine, that still accepted it. A lot of people had been suckered over those Super Bowl commercials, and needed a way to unload theirs. So, a few weeks ago, I just stopped taking it. I really had no choice. A lot of us had to stop taking it.”

“And we were believers in it. You know, there are problems with the banks, and I thought this was a better system. I was proven wrong.”

Concerns over cryptocurrency in California

California has made many moves to be more crypto friendly this year, with Governor Gavin Newsom signing an executive order for more crypto regulations and a bill allowing the usage of Bitcoin to pay for governmental services. However, following the big slide in crypto values in May, little more has been done as lawmakers watch and see if they are stable. Many crypto exchange companies have also moved from California in recent years due largely to a contentious business environment in California and the tech friendliness in Austin and Miami. Although with the rapidly falling prices of the currencies, the pinch didn’t hurt the state nearly as much as other businesses leaving.

“I left San Francisco at the wrong time,” said Mils Bjornsen, a crypto investor who moved from San Francisco to Miami in 2020. “I sold my Victorian there, came to Miami, and put everything into Bitcoin. My losses have been staggering. And now I wish I still had the house there because it would have been an amazing asset in case I can’t get out of this hole I’m in.”

Nonetheless, many are hoping for a rebound.

“Cryptocurrencies can’t afford to lose ground now,” added Dawson. “The blockchain technology behind them is still revolutionary and crypto needs to be here for proof of concept. This doesn’t make that technology look good.

“For California, I don’t know what to say to stop everyone from pulling out or choosing not to invest. People are going back to stocks and bonds, both of which are much safer and tried and true investments. Some people are saying Bitcoin can climb back up to $30,000 soon. Others are looking at it going to $10,000. Where it goes next will determine how much more people here will pull out or if it rises and proves itself. Who knows where it will go at this point.”

As of Tuesday, investors worldwide are watching the daily changes of Bitcoin and other cryptocurrencies, hoping to see where it goes from it’s current price.

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