Kentucky lawmakers propose tax incentives to draw in bitcoin miners

A pair of Kentucky lawmakers submitted a bill last week that aims to make the U.S. state a more attractive location for miners of bitcoin and other cryptocurrencies.

The measure — entitled "AN ACT relating to the taxation of the commercial mining of cryptocurrency" — was submitted by State Representatives Steven Rudy and Chris Freeland. The thirteen-page bill centers around changes to state law that, if approved and signed into law, would provide "sales and use tax exemptions on the tangible personal property directly used and the electricity used in commercial mining of cryptocurrency as of the date of approved application" with additional incentives focused on energy use.

In the bill's preamble, the authors noted that "the Commonwealth 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 through the Tennessee Valley Authority and other electricity providers[.]" 

The bill was submitted on January 8 and is at its earliest stages, according to public data.

As reported over the weekend, bitcoin's mining difficulty adjusted to a new high, constituting the first such adjustment for 2021. The mining sector is currently experiencing a hardware supply shortage that has made older models more economically attractive amid elevated market activity.