Bitcoin Miners Are Dusting Off Kentucky Coal Towns, Spurred By State Crypto Tax Incentives

Bitcoin Miners Are Dusting Off Kentucky Coal Towns, Spurred By State Crypto Tax Incentives

Since Governor Andy Beshear approved two legislation in March 2021 to encourage bitcoin miners to set roots in the southern state, mining rigs have started coming by the truckload in Kentucky. Senate Bill 255 expands the commonwealth’s renewable energy-based incentives to miners who spend a minimum of $1 million in capital, while Kentucky House Bill 230 offers tax advantages to miners. 

Kentucky and mining-related industries have experienced the advantages of the Act in the year since it was passed. According to data from Foundry Digital, a subsidiary of the crypto behemoth Digital Currency Group, Kentucky accounted for 18.7% of the United States’ total Bitcoin hashrate in October 2021, second only to New York’s 19.9%.Bitcoin mining is a decentralized computation that enables miners to upload fresh blocks of validated bitcoin transactions to the Bitcoin network. 

Bitcoin mining has gotten increasingly competitive over time, requiring miners to use expensive equipment and low-cost power in order to benefit from their efforts. About 90% of bitcoin (about 19 million) has been mined in the last 13 years out of a total supply of 21 million. On Tuesday, Blockware Solutions, a blockchain infrastructure and cryptocurrency mining company, announced the opening of its flagship mining site in Belfry, Kentucky, and a small hamlet on the West Virginia border with less than 500 residents.

In a statement, Kentucky State Representative Angie Hatton stated, “It is my goal that an area known for mining coal can now profit from this alternative sort of mining.” “I also expect that its substantial electrical requirements would assist to normalize our high residential rates.” If our family could save money while Blockware Solutions is physically making it, which would be fantastic.” Blockware CEO Mason Jappa told TechCrunch that the company’s flagship store in Kentucky is equivalent to the size of a Costco and is one of the company’s three planned locations in the state.

“The fact that an energy grid exists in the economy and region we’re in is fantastic,” Jappa said, “but there aren’t many energy users like us in the region, so if we can take down huge quantities of energy, we’re increasing system stability.” The data center is being built on a long-abandoned coal mine site and will have a capacity of 20 megawatts, which is enough to power a small rural town of 5,000 people for a year, he said.

“We discovered the ideal combination of everything we needed: political stability, low-cost energy, and local economic backing, all while being in an environmentally safe, sound, and cool location,” Jappa added. There aren’t just abandoned coal mines receiving a makeover. 

Nick Hansen, CEO of Bitcoin hashrate management platform Luxor, told TechCrunch that empty real estate across the country is being used, from steel factories in Illinois to neglected warehouses in Oklahoma and portions of the Midwest. “Most of these sites have power capacity built in by default,” Hansen added, “which is ideal for bitcoin miners to come in and start using them.” “These used-to-be-manufacturing towns are now bitcoin towns.”