Kentucky has become one of the leading destinations for block reward miners in the U.S., but the state is now reconsidering its electricity rates which have been its key attraction. The Kentucky Public Service Commission (PSC) has reportedly opened a probe into discounts offered to two BTC miners, even as local environmental groups call for the discounts to be canceled.
In a recent press release, environmental group Earthjustice revealed that the PSC is investigating the viability of two contracts signed between Kentucky Power and miners Ebon International, LLC and Bitiki-KY. The former operates a 250 MW mining operation in Louisa, while the latter owns a 13 MW mining facility in Waverly.
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 not only leave Kentuckians stuck with the bill for the miners but 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 make up 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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