Silicon Valley was ranked second in CoinDesk’s Crypto Hubs for 2023. The eight criteria were evaluated on a nationwide basis. This meant that the U.S. hubs suffered from a low crypto regulatory score. The U.S. scored high on the drivers criteria, which is a measure of crypto adoption. This helped offset the poor performance. Silicon Valley was a close second to Wyoming in terms of opportunities among the U.S. hubs. This is based upon per-capita rates for crypto companies, jobs and events. Silicon Valley’s high cost of living has resulted in a lower score for quality of life, a measure that is included within the enabler category. This score was weighted at 15%. The coastal Silicon Valley region, however, had a better score in terms of other enablers such as digital infrastructure and ease-of-doing business.

To learn more about the criteria we used and how they were weighted, please visit: Our Methodology for Ranking CoinDesk’s Crypto Hubs in 2023.

(Ian Suarez/CoinDesk)

Silicon Valley doesn’t need to advertise as the launchpad for some of the most successful tech companies in history, including Google, Apple, Facebook, you name them. It’s also been the home of some crypto startups including stablecoin issuer MakerDAO and blockchain analytics company CipherTrace.

The Valley, which is centered around San Jose, about 55 miles south of San Francisco, has an unprecedented concentration top tech talent. Stanford and other local universities are historically known for producing such talent. The Valley is also a hub for venture capital with companies like Andreesen-Horowitz (a16z), Sequoia Capital, and Lightspeed Venture Partners who have supported crypto startups.

This combination creates a positive environment for any new tech ecosystem. Crypto is no exception. The blockchain community, which is still a young one, faces competition from other emerging tech sectors.

Gene Hoffman, CEO of Chia and President of the company that created the blockchain, said: “For those who are looking for VC financing for crypto, it is nearly closed.”

The crypto industry used to be sucking the talent from more established “traditional” tech companies like Google, Amazon, or Apple. But now, it doesn’t seem as attractive for VCs, entrepreneurs, and other investors.

Why? Artificial-intelligence startups are stealing thunder. The recent SEC campaign against crypto, which included investigations into the two major global exchanges Binaryanceand Coinbase does not help. Hoffman stated that “all but the diehards” are worried about purchasing coins. We are not going anywhere because the SEC has blocked us.

It is possible to find money for a crypto project, yes. The list of VCs willing to invest has shrunk, and the ones that are still active have “definitely retrenched” to early-stage [funding].

Other U.S. technology hubs are also a threat

Hoffman noted that while crypto companies are not leaving the Valley, there appears to be a new wave of startups in other U.S. tech hubs such as Seattle, Austin, or Miami. High housing costs could be a factor. Some companies are considering moving out of the U.S. to countries with friendlier regulatory regimes.

The VCs have also started looking for other locations, even if they are not leaving the United States. In June, a16z announced that it would open its first non-U.S. Office in London where the government is more welcoming of crypto.

Silicon Valley’s demise as a crypto hub will be a long time coming. South Bay is a hotbed of tech ideas, funding and workers, and hosts many events and greenhouses like YCombinator. All of these are vital for aspiring crypto businesses.

Hoffman added that the community of tech professionals is still present. “For us, it’s a great place to source talent,” he said.

Jeanhee Kim & Bradley Keoun edited the book.