Kentucky Proposes Tax Incentive To Attract Bitcoin Miners

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By Landon Manning

Two Kentucky lawmakers have submitted a bill to the state legislature, attempting to use tax incentives to draw mining operations for bitcoin and other cryptocurrencies to set up shop there.

This 13-page bill, submitted by State Representatives Chris Freeland and Steven Rudy, calls for Bitcoin miners to receive a tax exemption of 6 percent, applicable either to their sales tax or the excise taxes on their electric bills and mining equipment, but not both. It also goes into some detail about some of the specific cases where either of these exemptions may or may not apply. Submitted on January 8, 2021, the bill is still in the very first stages on the road to becoming law.

Citing previous resolutions passed by the General Assembly indicating that the state would investigate the economic potential of cryptocurrency and its related businesses, the bill claims that proactive measures must be taken to ensure that businesses try to set up shop and build a greater framework of blockchain infrastructure in Kentucky, rather than in other states competing for this sort of business. 

The bill mentions several specific reasons that miners would be attracted to Kentucky, noting in particular the relatively low costs of electricity available there, thanks to natural petrochemical resources and hydroelectric power generated by the Tennessee Valley Authority.

It claims in its initial paragraphs that the state of Kentucky “has an opportunity to become a national leader in the emerging industry of the commercial mining of cryptocurrency, given its abundant supply of electricity that can be provided at lower rates than most states, and its established infrastructure to provide such energy.”

These advantages have already been exploited by an unlikely alliance of business partners: a local steel mill and its recent billionaire owners from Ukraine. An entire warehouse was converted into a data center to facilitate this pivot, with truckloads of computers delivered for installation.

This development demonstrates that there is a real market for cryptocurrency mining in Kentucky. If the local government passes the new initiative to further demonstrate its friendliness to Bitcoin production in the future, Kentucky could very well become a national hotbed for mining.

The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.

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