WHY THIS MATTERS IN BRIEF
The new world gives us new ways to earn money, and now in some cases some cities and governments are wondering if crypto mining can help them eliminate taxes.
Miami has announced that it will share with its residents some of the gains from the city’s new cryptocurrency and will distribute payments through digital wallets, Mayor Francis Suarez told CoinDesk TV on Thursday.
MiamiCoin launched in August last year through CityCoins, an open source protocol that allocates 30% of its reward to cites when their coins are bought or mined, and it’s part of a growing trend that’s seeing cities around the globe use such proceeds to generate new alternative sources of income that most of them are using to fund new city wide projects. In fact this trend is becoming so popular that it has its own name – Crypto Cities.
So far the cryptocurrency has generated over $21 million in the past three months for the city. If annualized, it would amount to roughly $80 million, which is already one-fifth of the city’s total annual tax revenue of $400 million, the mayor said.
“We’re going to be the first city in America to give a bitcoin yield as a dividend directly to its residents,” Suarez said.
While he called the payment a “Bitcoin yield,” the dividend will come from staking MiamiCoin, a separate digital currency. Suarez in October has already expressed hope that MiamiCoin could one day support the city without its residents having to pay taxes.
“MiamiCoin is based on the stacks protocol that stacks on the bitcoin blockchain, so there are all kinds of nexuses and involvement between one and the other,” Suarez said. Stacks, a separate blockchain, has its own mining system and its own token.
But before residents can get their dividends, the city must define who will get them. Possible parameters include taxpayers, voters, or residents, Suarez said.
There are also technological hurdles in making this happen. He said he would have to tap multiple companies and crypto exchanges to set up wallets for the recipients, which would require large-scale registrations and verifications.
Meanwhile, Suarez continues to be a strong backer of bitcoin and doubled down on his stance after the latest US inflation data showed prices are surging at the fastest rate in 30 years.
Bitcoin has long been touted as a hedge against rising prices due to its fixed supply of 21 million coins. The narrative held true on Wednesday, bitcoin rose to an all-time high after the inflation data came out.
“When you see inflation at over 6%, which I think is an under-reporting of inflation, and you see the price of bitcoin surging, it’s clear that people are taking their money out of dollars and putting it in a currency, in a store of value, that they feel confident in,” he told CoinDesk TV.
Suarez has been committed to building Miami up as a hub for digital innovation. In November he even took to Twitter to say he’d take his next paycheck in bitcoin, only to be outdone by New York City Mayor-Elect Eric Adams who said he will take his next three in the same asset.
Then, in October, Suarez told Bloomberg that his city will advance a plan to pay city workers in bitcoin. He also said he wants the state of Florida to allow Miami to hold bitcoin on its balance sheet. All of which is big news, so stay tuned and watch this space – literally.