Kentucky has emerged as one of the most popular locations in the United States for block reward miners, but the state is now rethinking its electricity tariffs, which have been its main draw. Even as local environmental organizations urge for the reductions to be canceled, the Kentucky Public Service Commission (PSC) has apparently begun investigating the discounts given to two BTC miners.
According to a recent press release from the environmental organization Earthjustice, the PSC is looking into the validity of two contracts that Kentucky Power and the miners Ebon International, LLC and Bitiki-KY signed. While the latter owns a 13 MW mining facility in Waverly, the former runs a 250 MW mining complex in Louisa.
According to Earthjustice, Bitiki-KY has already received a $250,000 tax credit from Kentucky.
The San Francisco-based non-profit organization is calling on the state government to recede the discounts, claiming block reward mining will leave Kentuckians stuck with the bill for the miners and is also harmful to the environment.
“Cryptocurrency mining is extremely and exponentially energy-intensive by design, and the discounted rates for these facilities could result in higher electric bills for everyday Kentuckians,” the organization stated.
At the heart of the probe is House Bill 230, which Kentucky lawmakers passed last year. The bill gave tax breaks to miners by removing the sales tax from the electricity they purchased. At the time, the lawmakers estimated that the breaks would cost the state at least $1 million annually. However, they pointed out that the state would more than makeup for this deficit with the miners they would attract and the new jobs they would create.
The tax breaks have paid off, with data from Foundry USA showing that Kentucky is now only behind New York for BTC hash rate production. Earthjustice disputes the economic development claims.
“I’m hopeful that the Commission will see these cryptocurrency mining companies’ empty promises that they will benefit local communities for what they are, and give more scrutiny to contracts like these in the future,” the organization said.
The group further pointed to failed experiments that block reward miners overpromised but under-deliver.
“It’s common for cryptocurrency mining operations to wildly overestimate the number of jobs they’ll create. A Rockdale, TX cryptocurrency mine promised more than 300 jobs in 2017, and ultimately only created 14,” it said.
The environmental group’s concerns come just weeks after New York Governor Kathy Hochul signed a two-year moratorium on block reward mining that relies on carbon-based fuels. The move was widely criticized across the digital asset industry.
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