Bitcoin miners are dusting off Kentucky coal towns, spurred by state crypto tax incentives – TechCrunch
Bitcoin mining rigs have been arriving in Kentucky by the truckload ever since Governor Andy Beshear passed two laws in March 2021 to incentivize bitcoin miners to establish roots in the southeastern state.
Senate Bill 255 extends the commonwealth’s clean energy-based incentives to miners who provide a minimum capital investment of $1 million, while Kentucky House Bill 230 provides miners a number of tax breaks.
In the year since their passage, Kentucky and mining-focused businesses alike have reaped benefits from the legislation. As of October 2021, Kentucky accounted for 18.7% of the United States’ total Bitcoin hashrate, second to 19.9% in New York, according to data from Foundry Digital, a subsidiary of the crypto giant Digital Currency Group.
Bitcoin mining is a decentralized computational process that allows miners to add new blocks of verified bitcoin transactions to the Bitcoin blockchain. Over the years, bitcoin mining has become more competitive and resulted in miners typically needing expensive equipment and low-cost electricity to profit from their efforts. Out of the 21 million total bitcoin supply, about 90% of bitcoin (about 19 million) has been mined in the past 13 years.
Blockware Solutions, a blockchain infrastructure and cryptocurrency mining firm, announced on Tuesday that it opened its flagship mining facility in Belfry, Kentucky, a town with fewer than 500 people right near the West Virginia border.
“It is my hope that a region known for mining coal will now benefit from this different type of mining,” Kentucky State Representative Angie Hatton said in a statement. “I also hope that its significant electricity needs will help stabilize our steep residential rates. It would mean the world if our families could save money while Blockware Solutions is literally creating it.”
Its Kentucky flagship location is comparable to the size of a Costco and is one of Blockware’s three planned sites in the state, Blockware CEO Mason Jappa told TechCrunch.
“In the economy and region we’re in, the fact that an energy grid exists is awesome, but there aren’t many energy consumers like us in the region, so if we can take down large amounts of energy, we’re adding stability to the grid,” Jappa said.
The data center is repurposing a coal mining site that has been abandoned for decades and will launch with 20 megawatts, which is equivalent to powering a small rural town of 5,000 people annually, he added.
“We found the perfect cocktail of everything we needed: political sustainability, low-cost energy and support in the local economy, as well as it being in an environmentally safe, sound and cool environment,” Jappa said.
Abandoned coal mines aren’t the only locations getting a face-lift. Empty real estate across the country, from steel mills in Illinois to forgotten warehouses in Oklahoma and parts of the Midwest, is being utilized, Nick Hansen, CEO of a Bitcoin hashrate management platform Luxor, told TechCrunch.
“Most of these places have the power capacity built-in by default, which is perfect for bitcoin miners to come in and start using them,” Hansen said. “These old manufacturing towns are turning into bitcoin towns.”