Another cryptocurrency data mining operation has set foot in the Upstate.
Litchain Corp. announced it is investing $80 million and leasing a portion of the Gaffney Public Works warehouse property on S.C. 105 for its operation.
Founder and CEO Tony Tate said the site will house as many as 20 modular data centers that house the Bitcoin mining computers. He said the business will create 25 to 30 jobs, locally, that pay $60,000 and up.
Last fall, Greenidge Generation Holdings of Dresden, N.Y., announced it will use a portion of the former LSC printing plant in Spartanburg County to start its crypto mining operation.
Last month, former GOP gubernatorial candidate John Warren announced the startup of a Bitcoin mining operation in Greenville called GEM Mining.
Bitcoin was launched in 2009, and only 21 million Bitcoins will ever exist.
Cryptocurrency like Bitcoin is a form of electronic money, with no actual bills or coins. The miners, or computers, earn rewards of Bitcoin by verifying worldwide transactions on the internet.
Bitcoin owners don't have to divulge personal information like a name or credit card number. They can transfer Bitcoins anytime or any place that accepts Bitcoin.
"Blockchain technology" eliminates the use of third parties such as banks, creating a shared public ledger. Each transaction is a "block" that is "chained" to a code, creating a permanent record of every transaction.
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The purchase and sale of Bitcoin are confined to a miner using computer algorithms. The miner who completes a new block is rewarded with Bitcoin.
"Cryptocurrency mining operations are an important part of the operation of Bitcoin and most other cryptocurrencies," said Gerald Dwyer, professor of economics and BB&T Scholar at Clemson University. "Mining operations use large groups of dedicated computers to try to solve a numerical problem, which is part of verifying new blocks of transactions.
"These mining operations use relatively knowledgeable employees who are well-paid," Dwyer said. "Having these mining operations here can be a distinct benefit to the employed workers and help to increase South Carolina's involvement in new advanced technology."
Dwyer serves on the advisory board of the South Carolina Emerging Tech Association, a group of blockchain enthusiasts "that believe every individual, business and branch of government in the great state of South Carolina can benefit from this and other emerging technologies," according to its website.
Skeptics say Bitcoin is an asset with no government backing and it is highly volatile. It's value can rise or drop sharply.
Joey Von Nessen, a research economist at University of South Carolina's Darla Moore School of Business, said he believes the crypto mining companies are legitimate businesses, but ones that carry a high risk.
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"These mining businesses are responding to an opportunity in a market that has come into existence," he said. "There is room for a company to be successful in this space.
"However, cryptocurrency is a brand new phenomenon in recent years, without a long-term track record. Whether it will be long-term is impossible to know."
He said the mining computers require high amounts of electricity to operate.
"South Carolina in general has lower energy costs and there is greater land availability in the Southeast," he said. "That may be one reason why we've seen several start up in South Carolina."
For the average investor, he said the volatile price carries risk. Last April, Bitcoin reached a record spot price near $65,000 before declining. The spot price at noon Friday was $38,644.
"It does rely on consumer perception as a driver of its value," Von Nessen said. "It's hard to predict its value. Like any type of investment, an individual has to make an informed decision."
About the CEO
A native of Easley, Tate has been a luxury real estate investor in the Orlando area since 2012, where he facilitated the buying and selling of real estate with cryptocurrency and blockchain assets.
A graduate of ITT Technical Institute and the University of Phoenix, he holds bachelor’s degrees in electronic engineering and business and information systems, as well as a master of business administration in technology management.
Litchain was incorporated by Tate in South Carolina Aug. 24, 2021, and is a company in good standing, according to the S.C. Secretary of State.
Tate said unlike other crypto mining centers and Bitcoin farms, Litchain enables investors to own their own hardware outright. A monthly fee covers electrical costs, network fee and, support.
"My vision is for the everyday individual to be able to wrap their heads around crypto before the world wraps their arms around it," Tate said. "Because once it becomes the norm, there won't be as much opportunity for underserved and under-resourced communities to actually elevate themselves, their finances and the lives of future generations."
Jonna Turner, communications director at Litchain, worked at OneSpartanburg, Inc. for two years before she left to join Tate's team.
Turner was former director of the Cherokee County Chamber of Commerce, and Tate wanted someone who had business connections there since he planned to set up in Gaffney.
"The reason I took (the job) was I felt it was going to catapult our state into the technology and innovation arena," Turner said. "This state is really needing this. I love helping the community and felt like what better way to do that than to be part of something new and exciting here in the Upstate."
Turner acknowledged that understanding how cryptocurrency works can be confusing.
"I'm still learning myself," she said. "We're not a financial adviser, but we can inform people what what cryptocurrency and blockchain technology can do. When we think of the evolution of money – bartering, coins, paper, debit cards and plastic, this is the natural progression of how we accept payment."
She said she understands why someone would be skeptical, and noted that an investors need to be responsible with their crypto choices as they would with any other investment.
"The downside is, it has its ups and down," she said. "But we are in control of our own money. The individual is in control. There is no middleman like the stock exchanges. You have to be responsible and have financial literacy."
But there is plenty of upside. She said Litchain has educational partnerships with Spartanburg Community College and Limestone College, and that many investors look to cryptocurrency to build generational wealth.
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This article originally appeared on Herald-Journal: Bitcoin mining operation opens in Gaffney, becomes third in Upstate SC