Bitcoin Beach? A Virginia Resort Town Helps Build a Crypto Hub

(Bloomberg) -- Even Virginia Beach, famous for its miles of sandy Atlantic waterfront, is angling to cash in on virtual currencies.

A local agency has approved a $500,000 grant to a startup based in town that’s embarking this month on a rapid expansion, opening a digital mining operation in a former beer distribution warehouse. The firm, Bcause, also plans to launch a cryptocurrency exchange and has applied to be a derivatives market with the Commodity Futures Trading Commission. The venture may also be eligible for a special property tax rate for data centers.

“Virginia Beach has been extremely helpful and great to work with,” Sean Ristau, Bcause’s director of exchange integration and education, said in an interview. “I think we’ll have a great long-term relationship.”

The seaside tourist destination, boasting a 3-mile (4.8-kilometer) boardwalk and souvenir shops hawking novelty T-shirts and saltwater taffy, lacks the classic features of a cryptocurrency mining town, such as extremely cheap power or a frigid climate to keep powerful computers from overheating. But it still has some selling points as a data center after becoming the landing spot for a 4,000-mile subsea cable to Spain developed by Microsoft Corp. and Facebook Inc.

Bcause was founded in Virginia Beach about five years ago. The city said last month it fended off competition from Pennsylvania, Montana and Turkmenistan while helping to persuade the company to expand at home -- a move expected to add 100 jobs with annual salaries around $60,000.

Bcause and its customers plan to invest $65 million in property and digital mining equipment for the operation. The $500,000 grant from the Virginia Beach Development Authority is tethered to the firm’s investment. The agency examines a company’s three-year history before making grants and distributes funds if recipients meet performance targets, according to Scott Hall, a business development coordinator with the organization.

“There’s nothing speculative in our grant program,” Hall said.

To contact the reporter on this story: Brian Louis in Chicago at blouis1@bloomberg.net.

To contact the editors responsible for this story: Michael J. Moore at mmoore55@bloomberg.net, David Scheer, Nick Baker

©2018 Bloomberg L.P.