Bitcoin miners are vacuuming coal towns in Kentucky, spurred by state tax incentives – Marketingwithanoy

Bitcoin mining rigs have been arriving in Kentucky by truck since Governor Andy Beshear passed two laws in March 2021 to encourage bitcoin miners to establish their roots in the southeastern state.

Senate Bill 255 extends the Commonwealth’s clean energy-based incentives to miners providing a minimum capital investment of $1 million, while Kentucky House Bill 230 provides miners with a number of tax breaks.

In the year since their approval, both Kentucky and mining companies have reaped the benefits of 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 crypto giant Digital Currency Group.

Bitcoin mining is a decentralized computing 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 has resulted in miners typically requiring expensive equipment and cheap electricity to capitalize on their efforts. 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 company, announced Tuesday that it has opened its flagship mining facility in Belfry, Kentucky, a city of fewer than 500 people near the border with West Virginia.

“I hope that a region known for coal mining will now benefit from this different form of mining,” Kentucky State Representative Angie Hatton said in a statement. “I also hope the significant electricity needs will help stabilize our steep housing rates. It would mean the world if our families could save money while Blockware Solutions is literally creating it.”

The flagship location in Kentucky is about the size of a Costco and is one of Blockware’s three planned locations in the state, Blockware CEO Mason Jappa told Marketingwithanoy.

“In the economy and the region we are in, the fact that there is an energy grid is great, but there aren’t many energy consumers like us in the region, so if we can reduce large amounts of energy, we add stability to the grid.” said Jappa.

The data center is repurposing a coal mining site that has been abandoned for decades and will launch at 20 megawatts, 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, cheap energy and support in the local economy, as well as in an environmentally friendly, healthy and cool environment,” said Jappa.

Abandoned coal mines aren’t the only locations getting a facelift. Vacant real estate across the country, from steel mills in Illinois to forgotten warehouses in Oklahoma and parts of the Midwest, is being used, Nick Hansen, CEO of a Bitcoin hashrate management platform Luxor, told Marketingwithanoy.

“Most of these places have the power capability built in by default, which is perfect for bitcoin miners to get in and start using,” Hansen said. “These old manufacturing cities are turning into bitcoin cities.”

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