Kentucky Sen. Brandon Smith has sponsored a bill that would extend the state’s tax incentives for alternative and renewable energy businesses to decidedly environmentally unfriendly cryptocurrency mining operations.
According to legislation tracking tool LegiScan, the bill was passed in the Senate by a vote of 36-1 on March 3 and was sent to the Kentucky House of Representatives the next day.
The bill, KY SB255, would rename Kentucky’s “Energy Independence Act” the “Incentives for Energy-related Business Act,” and make crypto mining facilities requiring an investment of at least $1 million eligible for tax breaks of up to 100% for server farms.
If that sounds like an unlikely combination consider this: The bill would rename the existing “Incentives for Energy Independence Act” the “Incentives for Energy-related Business Act.”
And, the bill would add the highlighted text below to the existing law:
“The purpose of this subchapter is to assist the Commonwealth in moving to the forefront of national efforts to achieve energy independence by reducing the Commonwealth’s reliance on imported energy resources, and to become a national leader in emerging industries which use substantial amounts of energy.”
No, seriously, it says that.
It also lets crypto mining facilities use coal-based power—something the existing law forbids for tax break-eligible businesses.
Equally eyebrow-raising is the addition the bill tacks this fifth item onto the list of purposes of that act, such as increasing the sale of energy-efficient alternative fuels and generating more solar and wind powered energy for sale: “Increasing the usage of electricity in areas which have an abundant supply due to the loss of manufacturing businesses across the state.”
All this comes as the immense power usage of cryptocurrency mining continues to attract more attention and more foes, including Treasury Secretary Janet Yellen, who brought it up at a the New York Times’s DealBook conference on Feb. 22. And on Feb. 26, BCA Research’s chief global strategist, Peter Berezin, predicted that crypto mining’s immense environmental cost will scare off corporate investors considering buying Bitcoin, beginning with funds focused on environmental, social, and governance (ESG) investments. It will also lead to more legal obstacles and eventually send BTC’s price into a “downward spiral,” he predicted.
The crypto mining bill that passed Kentucky’s upper house comes on the heels of the legislature’s March 2 passage of a bill that “would give an exemption on sales and use taxes to corporations like Amazon, Facebook and Google if they open data centers inside the state,” according to the Lexington Herald Leader.
As they say, one man’s trash is another’s treasure. While Kentucky politicians are seemingly willing to put a lot of effort—and money—into attracting cryptocurrency miners, authorities elsewhere are doing what they can to squash this industry. Plattsburg, NY, banned crypto mining three years ago after the power drain caused local residents’ power bills to rise.
More recently, reports say that regulators in China’s Inner Mongolia region announced plans this week to stop all cryptocurrency mining operations taking place within its borders, citing a dangerous strain on the coal-fuelled power grid, as well increased pollution.
The “national” power company of the Russian-backed breakaway region of Georgia, Abkhazia, to ordered an immediate stop to all local cryptocurrency mining activity at the end of 2020, following local problems with the energy grid. Earlier during the same month, a Russian power firm announced in late December 2020 that it fears that record high Bitcoin (BTC) prices may spur a new wave of illegal cryptocurrency mining operations threatening the region’s energy grid.