Opportunity Zone fund plans Bitcoin mining at Homestead
A Miami-based Opportunity Zone fund is keen to develop a Bitcoin mining operation and technology business park, amid growing global concerns about the environmental impact and energy consumption created by cryptocurrency mining, has learned The Real Deal.
Aware of the controversial aspects of Bitcoin mining, Esperanza Opportunity Zone Fund Chairman and CEO Jose Mallea said his group aims to use clean energy for its 5-acre Homestead project. The fund wants to tap into the power grid operated by the town of Homestead’s utility company, HPS Energy. The grid uses natural gas as the primary fuel to power its 10 power generation units at Homestead, according to the HPS Energy website.
Natural gas is “much more environmentally friendly,” Mallea said, compared to coal.
The project, called Homestead-Miami Blockchain Technology Park, would include buildings housing an incubator and tech tenants focused on cryptocurrencies. According to a September 13 letter Esperanza sent to Homestead City manager Cate McCaffrey, the fund has reached an agreement in principle with International Speedway Corp., the owner of Homestead-Miami Speedway, to use land near the racetrack that has access to the electrical and mechanical infrastructure necessary to power dozens of air-conditioned trailers equipped with computer equipment used for Bitcoin mining.
Al Garcia, president of the highway, said the race track would lease the 5 acres to Esperanza.
“I don’t know much about Bitcoin, but we have the infrastructure to generate the amount of electricity they’re talking about,” Garcia said. “And we have a lot of land.”
The site is located in a Zone of Opportunity, an area designated as economically challenged, where investment is encouraged by tax breaks on capital gains. In her letter, Esperanza said she will receive $ 5 million in seed money from the Florida Investors Opportunity Fund, a private equity and technology-focused investment fund. Mallea, a Miami-based entrepreneur and co-owner of the Biscayne Brewery, said investors in the Opportunity Zone will fund the development and own the business park.
To use HPS Energy as an energy source, Esperanza is asking the city to set a tariff structure of 5.5 cents for each kilowatt hour consumed, according to a six-page proposal the fund submitted to the city. The fund also provides Homestead with $ 5 million in learning programs for residents to learn blockchain technology and other community benefits.
Once completed, Bitcoin mining would consume 10 megawatts of electricity continuously each year, the proposal says. That’s the equivalent of 10 million LED lights on at the same time, according to the US Office of Energy Efficiency and Renewable Energy.
“The actual mining component is equivalent to $ 20 million in infrastructure and equipment,” Mallea said. “The development of the blockchain technology park is in the order of $ 15 million.”
Homestead spokesperson Zackery Good said the administration will present Esperanza’s proposal to Homestead City Council on September 29. He said the city would not comment on the project at this time.
Bitcoin and other cryptocurrencies are created when a computer “mines” digital money by solving complex sets of mathematical equations. It takes dozens of computers using maximum energy to produce large sums of cryptocurrency. A recent New York Times analysis found that Bitcoin mining consumes nearly 91 terawatt hours of electricity per year, more than all the electricity used in Finland in a year.
David Chase, partner of Coin Bayou, the company teaming up with Esperanza that would handle Bitcoin mining, said the recent evictions of Bitcoin miners in China as part of a cryptocurrency crackdown in the communist nation open the door to minors in the United States. Bayou already operates Bitcoin in Louisiana and Texas, which is seeing an influx of Bitcoin miners fleeing China, according to the BBC.
“Miners in China were very opportunistic, which created this environment in which they were willing to do anything to make money,” Chase said. “This project is quite the opposite. We are opportunistic in trying to find energy that does not come from dirty coal, oil, or any other hard carbon that comes from the ground. Ours comes from solar, nuclear and natural gas.