House flippers are gentrifying neighborhoods with crypto mining now

Back in March, Billy Penn, a local Philadelphia news outlet reported on a West Philly residence that had incorporated a cryptocurrency mining device as part of the home’s renovations. Following over a decade of vacancy, the three-bedroom home was acquired in 2018 (records show that tax was paid on the property starting in that year), before Mark Masih, a realtor at Compass took it over and began these renovations at the end of 2021.

According to Billy Penn, that property has sold for $237,000 this past May. Situated in a predominately Black neighborhood called Belmont, where the median household income was cited at $25,610 per year in 2019, this sale has signaled a price shift that has troubled some local residents.

Keep in mind that the average value of similar homes in Belmont was $159,730 (in 2019), but the potential for passively-generated sources via an Ethereum-miner, on top of a scalding housing market may have influenced the price hike.

Helium isn’t just for balloons — The crypto mining device — a small black-box installed in an upstairs closet — runs on Helium, and is able to connect to the home’s internet via a Wi-Fi router. To be clear, Helium is a wireless network for “internet of things” (IoT) devices, powered by hot spots emitted by the devices themselves; by participating in the network, users are able to generate crypto.

Theoretically, the resident in question would be able to make about $924 worth of Ethereum per year, before taking into account the cost of using the hotspot (according to Masih, the electrical costs would be $1.50 per month).

While that does sound nice, being able to bring in just under $1,000 a year should not exactly result in a 48 percent bump in property value. And while existing market conditions, in addition to a supposedly extensive renovation process (Masih noted to Billy Penn that the home was “virtually unlivable”) have certainly played a role in the property’s valuation, the idea of crypto-mining having any bearing on the ability to own a home is ominous.

Ang Sun, the president of a community organization advocating for affordable housing across the area, told Billy Penn that “more housing doesn’t equal more affordable housing... affordable housing should be suited to the median household income in a certain area.”

Even though Ethereum isn’t scarce like Bitcoin, it is still subject to the whims of the general crypto market. Accordingly, homes set up with mining devices are not always going to provide consistent value to its tenants.

I think we speak for most people when we say the idea of building price-inflated row homes stuffed to the gills with crypto-mining equipment while regular people struggle to simply put a roof over their heads isn’t quite the ideal future we had in mind.