Two Kentucky legislators recently introduced a bill to provide sales and tax exemptions on personal property and electricity used for commercial mining of cryptocurrency.
If adopted, the incentive that focuses on energy use would exempt miners from 6% excise taxes on their rigs’ electric bills and mining hardware.
Legislators intend to use the bill to foster the emerging cryptocurrency commercial mining industry by providing access to cost-effective energy. The abundant supply of electricity at lower rates would help miners to run high-powered computers that solve complex computational math problems on the BTC network.
The bill is good news for a resurgent crypto sector that is witnessing the most explosive bull markets on record. It would help make the US state of Kentucky a more attractive location for BTC miners.
“Access to cost-effective energy is critical to the development and growth of blockchain technology, particularly in the commercial mining of cryptocurrency, which requires a substantial and constant supply of energy,” an excerpt from the house bill stated.
Mining Sector Sees Elevated Activity
Kentucky’s crypto mining incentive bill comes at a time when bitcoin miners are seeing unprecedented gains amid a record bitcoin run.
As reported by The Daily Chain, top mining startups such as Riot Blockchain and Hive blockchain have recently surpassed the $1 billion mark in terms of market value. This growth has come on the back of soaring mining revenue that recently hit record highs as demand for newly minted coins explodes.
Unfortunately for commercial BTC miners, lucrative returns in the industry spurred on by the ongoing crypto gold rush have made mining even more difficult.
Mining difficulty reached a new record high on Jan 9, 2021, as more players entered the mining space at a larger scale than ever before. As such, incentives focused on efficient energy could go a long way in helping commercial BTC miners run profitable rigs and meet the surging demand for coins.
Miner Revenue Surge Causes Mining Hardware Shortage
The crypto mining industry is experiencing a hardware shortage amid elevated market activity. Case in point, Bitmain and Microbt miners are currently sold out until May 2021, driving the cost of the latest bitcoin-mining hardware up 35% in the past few months.
The unprecedented demand for new mining equipment is putting a strain on manufacturers. According to Edward Evenson, an exec at Braiins mining software company, ASIC manufacturers had to turn away over half a billion dollars in mining hardware orders in Q4 2020.
As the latest generation mining equipment becomes more difficult and expensive to procure, some miners are turning to older models that are more economically attractive at the moment.