Bitcoin Mining Firm Bcause Raises $5 Million As Cryptocurrency Recovers From Recent Lows

Remember the opening scene in the Paul Thomas Anderson film There Will Be Blood? A lone prospector is hacking away at some rocks at the bottom of a hole in the middle of the desert, trying to strike it rich.

That’s kind of like how “mining” for bitcoins used to be, a hot and toilsome pursuit of a decentralized group of amateurs, enthusiasts, and college students who could hook up their mining rigs to free electricity in their dorm rooms. But increasingly, as bitcoin mining grows more centralized and serious profitability is only achievable through massive scale, the “Wild West” era of bitcoin mining is in the past.

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As with the world of mineral and petrochemical extraction, squeezing money out of compute power went professional. With that comes a need for capital, and even in a difficult market, investors are willing to pay up.

According to an SEC filing posted this morning, Virginia Beach-based Bcause has raised $5 million in new funding. The company runs a hosted bitcoin mining operation and a spot exchange for its clients to turn freshly-mined cryptocurrency into good old-fashioned fiat money.

Bcause’s mining operation is “the largest of its kind in North America,” according to a February 2018 press release announcing the facility’s opening. The data center was initially outfitted with 84 megawatts of power and the company has plans to further expand its physical and electrical footprint. According to the government of Virginia Beach, Virginia, Bcause would invest $64.8 million in its 84,000 square foot headquarters and data center space, and hire as many as one hundred people.

Thomas Flake, founder of Bcause, told Bloomberg that the company and its clients only make a profit if bitcoin is priced “above $9,000 to $10,000.” If that’s the case, then the company’s been teetering on the edge of profitability for the past few months.

In the chart below, we’ve plotted pricing data from CoinDesk‘s Bitcoin Price Index for the last thirty days.

In the wake of the great crypto mania of late-2017 – during which time bitcoin surged to nearly $20,000 – the price of bitcoin retraced back to a fairly wide trading range between $6,000 and $12,000.

Over the last month, bitcoin didn’t rise much beyond $9,000. Whether the current upward swing in bitcoin prices can bring Bcause and other miners with similar economics back to consistent profitability is to be determined.

Illustration: Li-Anne Dias