Kentucky fashions itself a friend to bitcoin, approves $4M in electricity discounts to local miner
Kentucky previously passed tax breaks for bitcoin miners in 2021
Alexander Lukatskiy/Shutterstock modified by Blockworks
Kentucky could be positioning itself as a welcoming destination for bitcoin miners in search of more affordable energy options.
To that end, the state’s utility authority, the Public Service Commission (PSC), recently greenlit over $4 million worth of electricity discounts for local mining outfit Bitiki-KY.
The Kentucky Utilities Company had previously committed to these discounts for Alliance, the parent entity of Bitiki, in October 2022 under a 10-year agreement. Referred to as an “economic development rider” in the industry, these discount credits have been allocated to Bitiki for the initial five years of the contract.
As part of securing the lower rate for electricity, Bitiki agreed to invest approximately $25 million in its facilities, to develop a mining location in Waverly, Kentucky and to create five new jobs.
The contract also stipulated that should Bitiki default, it would have to reimburse the utilities company for a percentage of the discount credits.
This plan sparked some skepticism by political organizations and energy-focused societies alike, the Kentucky Lantern reported on Wednesday. To address those concerns, the PSC opened a case in November 2022 to investigate whether the discounts were reasonable or not.
These groups, which included Kentucky Solar Energy Society and the Kentucky Resources Council, argued that the jobs being created by Bitiki might not be worth the millions in discounts. They also questioned whether discounts should be saved for other industries that could create more jobs for Kentucky residents.
However, the PSC essentially handwaved those concerns in a Monday order, saying that the state’s utilities company isn’t required under state law to mandate that a company create a certain number of jobs in exchange for discounts.
“Bitiki has asserted that it plans to make $25 million in capital investments and its project will create five jobs. [The Kentucky Utilities Company] is not required to demonstrate minimum levels of investment or job creation. The Commission has no reason to doubt the veracity of Bitiki’s assertions,” the PSC order said.
The contract was approved effective immediately thanks to the signed order, and the utilities company will now have to file an annual report with the PSC detailing Bitiki’s revenues and the marginal costs it has incurred through serving Bitiki with the discounts.
This isn’t the first Kentucky has pursued policy objectives that could be interpreted as attractive to bitcoin miners.
Governor Andy Beshear signed a law in March 2021 granting tax breaks to cryptocurrency miners who operate within the state.
Just a year later, a study out of the University of Cornell found that Kentucky ranked among the top states to set up a mining operation.
Get the news in your inbox. Explore Blockworks newsletters:
- Blockworks Daily: Unpacking crypto and the markets.
- Empire: Crypto news and analysis to start your day.
- Forward Guidance: The intersection of crypto, macro and policy.
- 0xResearch: Alpha directly in your inbox.
- Lightspeed: All things Solana.
- The Drop: Apps, games, memes and more.
- Supply Shock: Bitcoin, bitcoin, bitcoin.
