VIRGINIA BEACH
Is digital currency the next big thing?
A local company thinks so and will invest nearly $65 million in a bitcoin “mining” facility.
BCause LLC, which launched five years ago in Virginia Beach, is opening the first sizable commercial data center on the East Coast for customers who want bitcoins. It will also be the largest in North America, according to the company’s founder, Tom Flake.
And the digital currency company is getting a boost with real cash.
The Virginia Beach Development Authority on Tuesday awarded BCause a $500,000 grant for the expansion. The company will add 100 full-time employees with an average annual salary of $60,000. New jobs will include computer engineers and administrative positions and will be posted at www.bcause.com.
The U.S. Treasury classified bitcoin as a legal, convertible decentralized virtual currency in 2013. However, the price of bitcoin was plunging on Wednesday, with reports that China and South Korea could ban cryptocurrencies. One bitcoin is worth around $10,000.
Bitcoin can be bought as an investment, like gold, or used like cash for transactions. Think of it like using a credit card to pay for items, but no banks are involved. That’s where miners come in.
Flake explained mining to Development Authority members this way:
“When you go into Best Buy to buy a big-screen TV, and you show them a piece of plastic, and you walk out with a $5,000 TV, it’s not because Best Buy knows who you are. It’s because they trust Visa. Yet, all Visa does is they take the money out of your ledger and move it into Best Buy’s ledger. And that’s essentially what mining does, except instead of it being Visa, virtually anyone around the globe can participate in maintaining that ledger.”
Bitcoin transactions are verified through mining. Specialized computers and software unlock blocks of transactions, and successful miners earn newly created bitcoins. Miners also can collect fees from bitcoin holders and payment processors for transactions.
The new data center will house tens of thousands of computers. Each is about the size of a bread loaf and will run 24 hours a day. Most will be owned by private companies, including the first 10,000 of them, which are arriving now from China and are stacked in boxes at BCause’s warehouse.
BCause also plans to offer leases for mining machines. An individual, for example, could lease one for $4,800 a year, Flake said.
The mining operation could be up and running by next week, he said.
On Tuesday, workers cut holes in the side of a warehouse building on Greenwich Road to prepare the space for the new mining equipment. The machines need large amounts of energy and release a lot of heat.
The company had considered other cities for its headquarters but chose Virginia Beach, which reduced the business property tax rate for data centers in December.
“We’re poised to be a hub for data centers,” said Director of Economic Development Warren Harris. “To reduce that tax has put us in a very, very competitive position.”
Stacy Parker, 757-222-5125, stacy.parker@pilotonline.com
