The richest men in the world have lost billions of dollars in the past week as cryptocurrency markets and technology stocks plummet.
According to the Bloomberg Billionaires Index, in the last 24 hours Elon Musk lost US$12.5 billion ($17.41 billion), Jeff Bezos lost US$9.17 billion ($12.78 billion) and Facebook – now Meta – CEO Mark Zuckerberg lost US$4.86 billion ($6.77 billion).
Changpeng Zhao, CEO of the world’s largest cryptocurrency exchange Binance, lost an eye-watering US$13.3 billion ($18.53 billion) in one day.
The prime movers behind these price drops are two-fold: tech stocks are retreating as investors eye potential interest rate hikes by the Federal Reserve in the US, and the entire cryptocurrency market is tumbling on the very same fears.
Given the personal net worth of the world’s richest people is almost entirely tied up in assets – Mr Musk is not sitting on a bank account totalling more than US$240 billion – such fluctuations in the market will likely impact their rankings on personal wealth lists.
Since its all-time high in November, Bitcoin has lost almost 50 per cent of its value and the cryptocurrency market as a whole has wiped more than $1.4 trillion in value.
Another thorn in the side of digital currency backers is government policy: three days ago Russia’s central bank proposed the banning of cryptocurrency mining on Russian soil.
Arguing that mining cryptocurrency (a complex algorithm-crunching process that involves huge computing power) threatened the financial stability of Russia, the central bank accused some cryptocurrencies as resembling pyramid schemes.
Simon Peters, cryptocurrency market analyst at eToro, said that if Russia were to ban cryptocurrency mining it will likely only affect prices in the short term.
“Russia imposing a blanket ban on bitcoin mining may well have an impact on its hashrate and price in the short term. However, I don’t believe this will be a long-term headwind,” Mr Peters said.
“Russia is only responsible for approximately 11 per cent of the global hashrate. This is in stark comparison to China, which when it banned Bitcoin mining in May 2021, the mining operations based there accounted for 60–70 per cent of the global hashrate of the Bitcoin network.
“When these China-based miners went offline due to the ban, the hashrate dropped significantly along with price.
“But, as those miners set up in other countries/jurisdictions the hashrate rebounded and is now at an all-time high.
“If Russia does ban Bitcoin mining we may well see a similar pattern, but to a far lesser extent.”
Here in Australia, one Bitcoin is currently trading at $48,967 per coin, down sharply from its November 8 high of more than $91,000.