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Bitcoin mining firm pays $13M for vacant Colorado Springs Intel plant

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Intel bought the plant for $45.5 million in 2000 and spent hundreds of millions of dollars expanding it before announcing plans in early 2007 to close the plant and moved chip production over seas. It has a class 10 clean room in it.


Bitcoin mining firm pays $13M for vacant Colorado Springs Intel plant
By: Rich Laden
June 21, 2018


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Colorado Springs apparently is about to take its place among the ranks of cities becoming home to the complicated and confusing world of bitcoin mining and cryptocurrency.

A California-based limited liability company, 3G Venture II, paid $13 million last week for a large portion of the former Intel Corp. chipmaking complex along Garden of the Gods Road on the Springs' northwest side.

3G Venture's owner, identified in public records as John Chen of suburban Los Angeles, couldn't be reached for comment. But Michael Palmer, a broker with Quantum Commercial Group in Colorado Springs who marketed the Intel property, and city economic development leaders, say Chen plans to launch bitcoin mining at the site.

While still a head scratcher for many people, bitcoins are a digital currency developed nearly a decade ago. Bitcoin mining involves the use of powerful computers equipped with special software to solve exceedingly difficult math problems; those who solve the problems - called "miners" - are awarded bitcoins in exchange for their successful work.

And bitcoins have a monetary value, although it's a volatile one; bitcoin prices have risen from about $1,000 at the start of 2017 to nearly $20,000 by the end of last year and falling to about $6,700 today.

Bitcoin miners need access to vast amounts of electricity - preferably at lower rates - to run their sophisticated computers and networks, and have established operations in several cities where cheaper power is available, according to news stories about the industry.

That's where the former Intel property and Colorado Springs come in, Palmer said.

In 2000, Intel opened a semiconductor plant in Colorado Springs after buying the former Rockwell International Corp. campus at 1575 Garden of the Gods Road. The 1.4 million-square-foot complex included manufacturing, office, warehouse, utility and parking space.

Intel, however, abandoned its Springs plant after selling the line of computer chips it manufactured there - part of the years-long decline in Colorado Springs' semiconductor industry. By 2009, Intel had shuttered the plant that once employed 1,000.

But the electricity network installed to accommodate Intel was particularly attractive to Chen and his 3G Venture for bitcoin mining, Palmer said. The Intel property includes an on-site substation and two separate power feeds, he said. The new owner also is working with Colorado Springs Utilities to increase capacity to the site, he said.

"There's just not many facilities, locations ... within Colorado Springs, that can handle anything like this," Palmer said.

CSU electric rates, meanwhile, are lower than in many cities and business leaders for years have sought to woo new employers to town, in part, by marketing the Springs' cheaper power.

With its need for electricity, a bitcoin mining operation is akin to a corporate data center, where businesses store computer servers and other equipment used to operate their websites and internal networks. Colorado Springs' cheaper power has attracted data centers operated by Progressive Insurance, FedEx and Walmart, among others.

Dirk Draper, president and CEO of the Colorado Springs Chamber of Commerce & EDC, said his group didn't solicit Chen and his bitcoin mining project, but did work with him after he expressed interest in the Intel property. Draper said he's unaware of any financial incentives that might have been made available to Chen.

While bitcoin mining will use large amounts of power and pump up revenues for Springs Utilities, and Chen's 3G Venture is likely to make a significant investment on machinery and equipment, the Chamber & EDC doesn't plan to pursue more such operations, Draper said.

Like data centers, bitcoin mining doesn't add many jobs - only enough to operate the computer network.

"While it is beneficial for some segments of the community to have the large base power users, and we understand that and are supportive of it, our focus is more on the employment side," Draper said.

3G Venture's purchase includes 30 acres and more than 700,000 square feet spread over four buildings. The bitcoin mining operation is planned for three smaller buildings, totaling about 85,000 square feet, on the property's south side, Palmer said.

The massive fourth building, a four-story, nearly 640,000-square-foot chip fabrication facility or fab, won't be part of the bitcoin mining operation, he said. Instead, Chen and 3G Venture plan to lease that space to industrial users, Palmer said.

The Intel property was purchased in 2009 by a partnership controlled by Los Angeles-area real estate investment firm Industrial Realty Group. The Industrial Realty partnership has since sold off portions of the site; El Paso County bought two buildings and a parking garage, where several government offices operate in what's known as the Citizens Service Center.

The sale to 3G Venture completes the sale of the old Intel complex, Palmer said.

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Contact the reporter: 636-0228

Twitter: @richladen