Going from one of the oldest processes to one of the newest, Pine Bluff’s former commercial building is being prepared to become a cryptocurrency mining operation that could attract a $10-million investment. $15 million and employ up to 75 people, company officials said.
Currently, the building, which has been mostly vacant since September 2020, is being cleaned and brought up to code, according to Joe Delmendo, owner of Commonwealth Real Estate of El Segundo, Calif., who purchased the building in November. auctioned for $619,500.
Delmendo, who has experience managing single-family and multi-family housing, said he has not made public his business venture in Pine Bluff due to infrastructure work that needs to be done before construction can begin. mining works.
“I didn’t want to waste anyone’s time,” he said Friday from his phone as he walked away from the nearly 18,000 square foot building at 300 S. Beech St. that he nicknamed “The Starbase”.
“I know there’s a lot to do for the building, and I want to collect all the eggs and roll them,” Delmendo said.
Cryptocurrency mining uses computers, called nodes, to verify cryptocurrency blockchain transactions by solving computational problems. The process practically guarantees the validity of the transaction, and to solve the problems, the operator of the nodes receives a certain amount of cryptocoin. The computing power needed to verify transactions requires a huge amount of electricity, which is one of the reasons the company became interested in the Pine Bluff property.
Austin Joyner, who handles public relations and business development for the company, said he came across an ad for sale for the old newspaper building in August or September and learned he was going to be sold at auction. Joyner said he thought about cryptocurrency mining and learned the building was powered by one megawatt of electricity, which was needed to run the press.
“We immediately thought it was a great fit, with the high power output,” Joyner said. “The building’s ventilation system was designed to regulate the temperature of the printing press, so that was also something we considered a plus.”
Joyner said his company has invested some $1.5 million in the project so far, which includes the sale price of the building. He said that in 60 to 90 days the mining process should begin, depending on how quickly the building upgrades take. Within a year, he said, between 30 and 75 people could be employed at the site with salaries ranging from $25,000 to $30,000 for entry-level workers to $50,000 to $80,000 for junior workers. skilled employees who are computer literate.
“There are a lot of unknowns for us,” he said. “It’s a very open technological environment.”
Joyner said the company is talking with Entergy in an effort to increase the amount of electricity coming to the building. The megawatt of power currently supplied will run 340 computers, and Joyner said the company eventually wants 15 megawatts of power to run more than 5,000 units.
Because the newspaper building once housed a press and held many rolls of newsprint, there are large areas that can easily be converted into spaces to hold the computers, Joyner said, but even with those demands there should be enough space to accommodate other business operations. .
“We would like to see other manufacturing operations as part of the building business model,” he said. “It’s a commercial area, so we might have several different operations going on.”
Asked how such an industry is taxed, he said it was “a very interesting question”.
“We’re always looking at that angle,” he said. “There are a lot of new regulations being considered. Right now we’re reserving 30 per cent, but we’re talking to lawyers and forensic accountants, the nine yards. We just have to move forward with the best of intentions and learn as we go.”
Joyner said the learning curve was steep.
“When we started, we had no idea what we were doing,” he said. “There is no step-by-step manual. There is no green light or red light, just a yellow light. NFT [non-fungible tokens] and crypto, you have to be careful because it’s the Wild West out there, and the rules are made as they go.”
Most of the crypto-mining happening today, he said, has to do with bitcoin, which is a specific type of cryptocurrency. The main reason for this is that bitcoin continues to attract the most interest across the world as an uncentralized and unregulated currency. Another reason is that, from a speculative point of view, bitcoin has outperformed its many competitors. In 2010, a bitcoin was worth 8 cents. Today, a single bitcoin is worth nearly $40,000. Put another way, a $1,000 investment in bitcoin 22 years ago would be worth some $287 million.
Still, Joyner said cryptocurrency itself and crypto mining is not for the faint of heart or the wallet.
“There are so many variables,” he said. “You need to have your feet planted. You better have all your T’s crossed and your I’s dotted because it’s scary sometimes.”
Joyner said the crypto market resembled the dotcom bubble that peaked in 2000, a time when tech start-ups came and went at a dizzying pace.
“We believe in crypto, but we understand the risks. We’re not suggesting anyone throw their life savings into it. There’s just too much risk.”
Drake Seal, wearing a sleeveless t-shirt and sporting a funky haircut, has been out in the field with two other employees, cleaning the building and bringing it up to code since mid-March. He is the operations manager, which means he has to turn the old log space into what will be needed for mining.
Most of the large spaces have been cleaned up, although the old newsroom still has desks and chairs and on the walls there are still plaques for journalism awards.
“It’s been an interesting process,” he said. “Right now, no electricity along this whole wall is working. And these boxes of old computers, monitors and printers, I don’t know what I’m going to do with this electronic waste.”
Seal stood in a large room that once housed the original press, but more recently housed dozens of large rolls of newsprint.
“This room is 110 feet by 30 feet,” he said. “It’ll be big enough to house the computers, and they’ll be stacked about 14 feet high.”
Seals called the operation “our pilot project.”
“We want to prove that this concept works,” he said.
The three company officials said the new company hoped to work with Pine Bluff.
“We know Pine Bluff has lost population and we want to work with the city to help bring Pine Bluff back,” Seal said. “We want to reach out to the community.”
Says Joyner, “We want to build relationships in the community. When you can do that, it helps both parties. We want to include community development programs in the overall process. The owner’s goal is to give back.”
Commonwealth Real Estate already does business in Oklahoma, Texas, Alabama and Tennessee, but this is the first large-scale cryptocurrency mining operation for Delmendo, he said. .
“I started mining in 2019 on a small scale, but this is the first larger scale operation we have attempted,” he said.
Asked how a real estate professional can pivot into the complex world of cryptocurrency mining, Delmendo said he views the effort as part of a “well-diversified portfolio,” adding that he would like to expand elsewhere in Arkansas “as long as we can get local government on the same page and not be shunned. It’s a matter of trust.
As for using the name Starbase, which is a place along the Gulf Coast of Texas where Elon Musk’s rocket prototypes are created, Delmendo said there are similarities in the way he and Musk are working.
“Elon Musk and I use the same business models,” Delmendo said, referring to courses he taught on the subject of acquisitions, asset management and private finance. “We gather the necessary investments, then let the professionals do their job.”
Asked what price he paid for the building, Delmendo said the auction took the sale price much higher than he wanted to spend but was determined to win.
“I don’t know what it was,” he said. “I don’t know why I did that. I almost tripled my maximum bid. I’ve never done that in my life. It spoke to me, to say the least.”