Kentucky to attract cryptocurrency miners with tax breaks
Kentucky is looking to attract cryptocurrency miners to the state by offering them tax breaks
Two Kentucky lawmakers urged the state to offer tax breaks to Bitcoin and cryptocurrency miners looking to leverage the energy-rich region.
General Assembly Representatives Steven Rudy and Chris Freeland proposed a bill last week to exempt commercial cryptocurrency miners from paying certain taxes. The miners would be exempted from paying 6% sales taxes or 6% excise taxes on their rigs’ electric bills and mining equipment.
The representatives believe Kentucky could become a national leader in the cryptocurrency mining sector thanks to its low energy rates and abundant electricity supply. Hence, the tax breaks would help the Commonwealth of Kentucky to further compete and emerge as a market leader in the cryptocurrency industry.
According to the bill, commercial mining of cryptocurrency “should and must be taxed in a manner similar to historical forms of manufacturing or industrial processing, in order to continue to encourage the location and expansion of such operations in the Commonwealth, rather than in other states likewise competing for such businesses“.
To be considered as a commercial cryptocurrency mining rig, the setup must have a colocation facility. As per the bill, a colocation facility is an industrial facility of not less than two hundred thousand (200,000) square feet located in the Commonwealth that is utilised in the commercial mining of cryptocurrency. It could also be used for “hosting persons engaged in the commercial mining of cryptocurrency through the utilisation of the facility’s infrastructure, including servers and network hardware powered by internet bandwidth, electricity and other services generally required for such mining operations“.
Hence, the tax breaks would apply to miners running colocation facilities for cryptocurrency mining operations.
The Republican lawmakers submitted the 13-page bill to the General Assembly on 8 January, and the committee is currently reviewing it.
Cryptocurrency and blockchain technology is gaining rapid adoption from countries and regions globally. Due to the massive use of energy, regions with cheap electricity tariffs have become the hotbed for cryptocurrency miners.
To date, China remains the leader in the cryptocurrency mining space. It is home to many of the world’s biggest mining pools, consisting of large groups of miners who combine resources and share processing power.
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Hassan Maishera, @KhareemSudlow