“Go outside and play!” is something your mom probably yelled at you sometime in your childhood while you were wrapped up in a video game. It’s important to leave the digital realm every once in a while to gain perspective from nature, to explore (externally and internally), and to get a good tan going. However, we here at the Zing Blog know that financial blunders can happen anywhere, so no realm is safe! This week in financial blunders, we show mishaps in both the digital world and glorious nature.
The world of Bitcoin has seen many ups and downs as the digital currency has grown in popularity, but it had a massive setback on Monday with its largest exchange site, Mt. Gox. The New York Times reported that major Bitcoin companies announced that Mt. Gox would be filing for bankruptcy “after months of technological problems and what appeared to have been a major theft.” Whether it’s due to gross neglect, theft or both, the exchange site allegedly lost 744,000 Bitcoins over years, or roughly 6% of the Bitcoins in circulation. The exchange rate for Bitcoin fluctuates rapidly, and it dropped after the announcement from Mt. Gox, but the U.S. dollar amount stolen sits above $400 million at the time this article was written.
Bitcoin critics were quick to call this the end of a shady, decentralized currency, calling the Mt. Gox situation an unwavering piece of evidence that Bitcoin can’t sustain itself. Many users remain optimistic about it though, and Bitcoin believers believe it was necessary for Mt. Gox to fail if Bitcoin is to evolve and be taken seriously. Last year, Mt. Gox lost $5 million from its accounts after it was seized by the U.S. government, leaving many to think it would croak right then. However, it stayed open and started moving at a very slow pace; some users called Mt. Gox a Ponzi scheme after waiting days for their transactions to finalize or to withdraw all their money. A commenter named Chris on the New York Times article put it this way: “The well-informed members of the Bitcoin community knew that Mt. Gox was a mess, and most didn’t take it seriously … time will show that Gox was just a poorly-run business that had been an albatross for years and needed to die off as the world of Bitcoin evolved.”
It’s been an incredibly dry rainy season for California, one that could break 500-year drought records – and this could mean big trouble for the farming industry in the region. In one of the many articles Al Jazeera published on the California drought, the potential costs the farming industry may face came to light. To start, the drought is so bad that many farmers are stuck with the difficult decision of planting crops and hoping for rain, or leaving their land fallow (plowed but left seedless to improve the soil). It’s a tough strategic call for these business owners who are also forced to cut their workforce for costs.
We won’t see the total cost on the industry until harvesting ends, but people are getting worried. In 2009, the last year for a significant drought, 600 jobs were lost and $350 million was lost in crops. Experts are expecting those figures to more than double for this season: “I could see that $350 million could be close to $1 billion – 6,000 jobs could be 15,000 this year,” said Jeffrey Michael, director of the Business Forecasting Center at the University of the Pacific in Stockton.
Those are all the stories we have this week, but please comment below if there’s another you’d like to talk about.