Bitcoin mania came and went, but Michigan is still said to be home to some savvy bitcoin millionaires who knew to buy the digital currency while it was super cheap.
A few of them were in Detroit on Thursday night for a local business event in Midtown about different ways to use the record-keeping technology, known as blockchain, that undergirds bitcoin and other digital currencies.
“They invested early and held on,” said Nate Talbot, 42, executive director of the nonprofit Detroit Blockchain Center, which put on the event called Detroit Blockchain & Fintech Pitchfest.
Nate Talbot, 42, executive director of the nonprofit Detroit Blockchain Center, speaks at the Detroit Blockchain & Fintech Pitchfest.JC Reindl, Detroit Free Press
“Most of them were not just ‘I want to get rich,’ ” he said. “They were into the technology and what it can do. I like to tell people ‘Come for the riches, stay for the revolution,’ and that’s what a lot of people did.”
David Smith, 37, of Lansing was one of the bitcoin millionaires in attendance. He said that he retired from his tech industry job in 2017 after striking it rich in bitcoin and similar digital currencies.
More: Ohio bitcoin tax gimmick is like paying with Beanie Babies
More: Novi police: Man loses almost $8K in Bitcoin for false drug trafficking warrant
As other early buyers of such currencies sold their holdings after the collapse of bitcoin’s late 2013 mini-bubble, Smith kept accumulating more.
In 2017, the dollar value of bitcoin and other digital currencies, known as cryptocurrencies, started to soar. The value of 1 bitcoin peaked that December at nearly $20,000, up from just over $200 in early 2015. Smith became a bitcoin millionaire — and newly retired.
He recalled the bitcoin frenzy that took hold in late 2017 and early 2018.
Detroit Blockchain & Fintech Pitchfest held Thursday Feb. 28 in Midtown Detroit.JC Reindl, Detroit Free Press
“People got excited about it and saw other people putting money in and doubling it in about a week or two weeks,” Smith said.
“I started getting all kinds of calls from high school friends and family members saying, ‘Oh, this bitcoin thing,’ ” he said. “I was a little bit scratching my head and thinking why would they want to get in now, when the price was whatever it was, $12,000, instead of back when it was $90 or $150.”
But soon the bubble burst and values plunged. Many cryptocurrency buyers who were late to the upswing lost money. But early adopters such as Smith stayed in the positive.
Digital currency enthusiasts refer to the current languishing values as a “crypto winter.” On Friday, the value of 1 bitcoin was $3,815 compared with $10,974 a year earlier, according to the Coinbase digital currency services website.
Smith declined to give the current value of his digital coin holdings, but said that he is still a bitcoin millionaire. He said he didn’t cash out his bitcoin during the peak of the bubble because he believes in the cryptocurrency concept and thinks values are poised for a big rebound.
“I think there’s more upside to be realized,” he said. “I don’t want to sell at $20,000 and have it go to $100,000 in the next three years and then be like, ‘Oh, I just missed out on 5x’ing my money.’ “
“And there is also like a religious component, where I feel like this is a good thing to exist in society,” he added.
Thursday night’s event attracted a racially diverse, although predominantly male crowd of about 200. In interviews, many of them said that they personally know Michiganders who saw windfalls from investing in bitcoin and other digital currencies. They also know people who had lost money.
“I know at least one who is now a millionaire off of it; a few people who made a few hundred grand off of it,” said Jon Anderson, 28, of Detroit.
Nathan Olmstead, 37, of Ann Arbor said he knows a person who likely made a few million dollars in cryptocurrency and cashed out of some of it during the peak.
“I know they bought a $150,000 car and were driving around in that,” said Olmstead, who admitted to losing about $2,000 of his own money when the bubble popped. “I was like, ‘I want to do that, too.’ But it didn’t work out so well.’ “
Some of the most successful cryptocurrency investors at the event were reluctant to give their names or share the value of their holdings. They feared that such publicity could result in similar problems in their lives as those commonly faced by lottery winners.
One 26-year-old man from metro Detroit spoke only on the condition of anonymity, and only after prodding from a friend who had outed him to a reporter as a bitcoin millionaire.
The man said he started amassing bitcoin about eight years ago by “mining” it with a special computer that his cousin lent him. Bitcoin mining is the process of adding new bitcoins to circulation by using computers to answer math problems.
He wouldn’t say how many bitcoins he has or their current value.
But he did note how it was much simpler for regular people to create bitcoin when he started. Today, there are companies across the globe operating extensive bitcoin mining “farms” with hundreds of computers.
“It was easier to mine back then,” the man said.