Earlier this week, Virginia-based cryptocurrency mining company BCause LLC was awarded a $500,000 grant by Virginia Beach as part of a deal to keep the company’s operations and headquarters in the city. The company, founded in 2013, is currently in the process of moving into an 84,000 square feet facility, with an estimated $64.8 million in capital investment into the property. The new facility is expected to bring around 100 new jobs into the Virginia Beach economy, with an average annual salary of $60,000.
The Economic Development Investment Program grant was issued by the Virginia Beach Development Authority, and is just one of several local tax breaks and incentives the 5-year-old mining company is likely receive as part of the retention deal. The BCause facility was once home to the Hoffman Beverage company, and includes an option to lease an additional 21,000 square feet for future expansion. The BCause operation is expected to start operations next week, and will house around 10,000 individual mining units.
As reported by the Virginian-Pilot, the bulk of these miners are owned by private companies, with BCause itself providing maintenance, housing, operations, and support services. BCause founder Tom Flake says that the facility will be used to mine bitcoin and Bitcoin Cash, although it is extremely likely that other coins will also be mined there. The facility is expected to scale to include tens of thousands of new miners in the coming months. Flake also told the paper that his company is considering the idea of leasing individual miners directly to customers.
While it is unusual for a cryptocurrency mining operation to receive support from a local government, grants and incentive packages like this are fairly common tools used by cities to encourage business investment. In December of 2017, Virginia Beach approved a substantial tax-reduction incentive plan for data centers, a move that likely played a significant role in BCause’s decision to remain in the area. Last month, Global Technical Systems (GTS) was awarded a grant of $1.8 million for relocating to Virginia Beach, a number that almost seems disproportionately high given their $54.7 million investment — a full $10 million less than BCause — in the city. (To be fair, GTS is bringing 1,100 jobs into Virginia Beach, while BCause is only expected to create around 100.)
Virginia Beach’s economy has traditionally been reliant on two key industries — tourism and military bases — making the addition of tech companies a welcome diversification of the city’s tax base. Warren Harris, Virginia Beach’s Director of Economic Development, told the Virginian-Pilot that incentivizing companies like BCause to remain in the city is part of the government’s long-term economic plans. “We’re poised to be a hub for data centers. To reduce that tax has put us in a very, very competitive position.”