As the demand for digital currencies grows, it is being met with a scarcity of computing resources. To attempt to address that issue, Redivider is launching the Redivider Blockchain Opportunity Zone Fund, which will invest in data center locations nationwide.
Opportunity Zones, at least among the CRE community, are better known for more traditional investments, such as affordable housing. However, OZs can accommodate any real estate asset category, including data centers.
What makes Redivider’s play so interesting is the focus on cryptocurrencies—with their high energy and computing needs—as a driver for data centers. Cryptocurrencies are increasingly moving into the mainstream, with some corporations using them as part of the corporate cash holdings and a growing number of financial institutions offering cryptocurrency-related products and services
Redivider is raising capital to invest the allocation into a qualified opportunity zone business to offer computing leases and hosting services for the cryptocurrency mining industry. To the extent allowed by the opportunity zone rules, it could invest up to 10% in other high yield securities or cryptocurrencies.
Besides investing in data centers, the Redivider opportunity zone fund will also acquire large inventories of specialized servers that process transactions and earn transaction fees. In addition, the opportunity zone will be able to lease out computing nodes under management, which will help it generate revenue from the hardware and low-rated electricity contracts.
“The Redivider Blockchain model is the next generation turn-key solution for miners looking for USA hashrate with lower risks related to both jurisdiction and power source.” Thomas Frazier, fund manager, said in a prepared statement.
In the larger CRE industry, there are examples of developers and property owners experimenting with cryptocurrencies.
Recently, KPG Funds announced that tenants can pay rent in digital currency at 446 Broadway L ‘Atelier. In addition, the commercial real estate firm said that it will begin accepting digital currency rent payments using Signature Bank and Bitstamp as its partners.
“We believe that cryptocurrency is here to stay. Tenants have started to ask for this payment solution, and we wanted to be able to satisfy their needs,” said KPG Funds CEO Gregory Kraut in a prepared statement.
In San Francisco, 20Mission, a 41-room co-living space owned by early Bitcoin millionaire Jered Kenna, is using NFTs to let people bid on 75-year rights to lease a room for $1 a month.