In Brief
- Much ballyhooed Blockchain City, in Nevada, announced that 9 employees were let go recently.
- The company has also seen some top executives leave.
- A spokesman says that, despite some setbacks, the project is still on track.
The company behind an ambitious attempt to build a “Blockchain City” in the Nevada desert has laid off a tenth of its employees, according to a company statement. Two years in, the company, Blockchains, LLC, has yet to break ground on the city and is focusing its attention on the development of a “suite of Web3 products and tools.”
Known for its flashy billboards and enigmatic ad campaign, Blockchains capped a year of blockchain hype after its millionaire CEO, Jeffrey Berns, purchased 67,000 acres of undeveloped land near Reno for $170 million in late 2018. The intention, per the New York Times, was to use the technology to undergird a local infrastructure that would be based around digital currency and be free from invasive privacy practices.
But the company has been working to secure the necessary permissions from the local government, and was forced to lay off at least nine of its 100 full-time employees, the company said. Last year, it said it would employ over 1,000 people by 2021.
Senior executives including David Berns, the former president and brother of the CEO, have also left the company.
Many of the former employees’ duties have since passed on to engineers at Slock.it, a blockchain advisory firm Blockchains LLC acquired in June 2019. Slock.it, based in Germany, was responsible for coding the 2016 experimental “DAO” fund, which suffered a $50 million hack.
Elaina Duffy, a spokesperson for Blockchains LLC, told Decrypt that the company currently has 67 employees in Nevada, and 52 across various European subsidiaries. “As with any acquisition, during the integration process it was necessary to evaluate our combined workforce,” she said. “As a result, over the past six months, we have eliminated nine positions. During that same period, we have hired nine new employees at our Nevada headquarters, including two directors and a vice president. Our founder, Jeffrey Berns, will assume the role of president as David Berns has left the company.”
She added: “As with any organization, especially startups, we will continue to evaluate the company’s operational needs. To date, Blockchains’ has only eliminated positions that are no longer essential to the business. We are committed to hiring employees who have the skillset to move our vision forward in a rapidly changing ecosystem.”
Bubble high flyer
Blockchain LLC emerged in late 2018, at the height of blockchain hype. Projects advocating the glories of the decentralized future were generating enormous investments; blockchain gambling platform EOS alone purportedly raised $4 billion from starry-eyed retail investors.
Blockchains LLC’s CEO, Berns, is a former consumer protections lawyer who made his fortune suing banks in the wake of the 2008 financial crash, before plowing much of his wealth into cryptocurrencies. In setting up Blockchains, he spent $300 million of his own cash on land, offices, employees and planning, initially employing 70 full-time workers.
The land, situated near the site of a large industrial park in Storey County, Nevada, is a designated "opportunity zone," offering tax incentives to those who make long-term investments in the region.
Philanthropic goals
Blockchains LLC's intentions were supposedly philanthropic: according to the Times, Berns planned to hand over 90 percent of whatever dividends the effort generated to a “distributed collaborative entity,” a “corporate structure that will be held by residents, employees and future investors.”
Early on, the project won the approval of local officials, and the company inked a non-binding memorandum of understanding with Nevada utility, NV Energy. It also received “preliminary” support to construct a new town—with construction slated to begin in late 2019, according to the Times.
But Blockchains has made little progress since, having struggled to obtain water rights for the putative 10,000 resident city, sources say. The project was formally "put on hold" in the summer of last year, according to one former employee, and the “suite of Web3 products and tools” have yet to yield even a white paper. Reviews on employer-rating website Glassdoor (which we could not verify independently but match testimony from multiple sources) describe an atmosphere of aimlessness and confusion.
Project still on track
Blockchains's spokeswoman, Duffy, denied the project had been put on hold, saying that "numerous components crucial to the city's infrastructure" had already been implemented. "We are going through the necessary steps which include securing water, energy, creating a master plan," she said. "However, the smart city is and always has been a 10- to 15-year project."
The company is now hiring for a "Senior Director of Land Development," she added.
Other projects, fattened on enormous investments and then blindsided by the collapse in the markets, have fared similarly. Ethereum incubator ConsenSys, which funds Decrypt, dismissed 13 percent of its staff in late 2018 after growing at a rapid—and ultimately unsustainable—clip. Crypto startups ShapeShift and Circle followed suit later that year.