Kentucky seeks to lure block reward miners with tax and energy incentivesMarch 18, 2021
Kentucky has passed two bills that seek to position it as one of the most attractive destinations in the U.S. for block reward miners. The southeastern state will issue tax and energy incentives to the miners in a move they hope will create jobs and spur economic growth.
House Bill 230, exempting miners from paying taxes, was first proposed in January by General Assembly representatives Chris Freeland and Steven Rudy. It proposed scrapping the 6% sales tax and the 6% excise tax on the miners’ equipment and electric bills. The two implored the General Assembly to seize the opportunity to make Kentucky a national leader in block reward mining.
The second bill makes the miners eligible for incentives awarded to clean energy facilities. For miners to qualify for these incentives, however, they have to have invested at least $1 million in the state. This bill, proposed in the Kentucky Senate, requires miners to apply for the exemption from the Department of Revenue “and when approved, it must report the exemptions claimed per fiscal year beginning November 1, 2021, and each November 1 every year thereafter.”
The two bills sailed through the two Houses, garnering 74-19 and 84-16 votes in support respectively. They are set to become effective on July 1 and to be sunset on June 30, 2030.
Kentucky’s regulatory changes will not come cheap for the Bluegrass State. According to a fiscal note on the bill exempting miners from taxes, it will set the state back up to $9 million. For the purchase of the mining equipment, the miners will enjoy a tax exemption ranging from $5-$6 million. Thereafter, they will continue to take advantage of this exemption each year as they replace their equipment, costing Kentucky up to $2 million annually. In addition, electricity exemptions would hit $1 million each year.
“This proposal has been scored at $9,000,000 based on the assumption that at least one new facility would come online in the next year, and existing facilities in the state would be able to take advantage of the exemption,” the note concludes.
Block reward miners have faced criticism for their high energy consumption. However, Kentucky legislators believe this won’t be a challenge for the state as it already produces excess power.
Senator Smith, the sponsor of the bill, told his colleagues, “We have got companies that are spreading across the country, and they really like Kentucky because, as these coal companies and other businesses have closed, it creates surplus power. And so the power companies are stuck with either raising your bill, which we’ve seen, or finding places that use it.”
See also: TAAL’s Jerry Chan presentation at CoinGeek Live, The Shift from Bitcoin “Miners” to “Transaction Processors”
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