Through tax credits and incentives in Senate Bill 590, Oklahoma legislators are intending to draw cryptomining businesses to the state.
Cryptominers solve complex math equations using computers. Those solutions validate transactions and then this information is put on blockchain, which is a digital ledger. Cryptocurrency mining requires large computers and cooling fans, and subsequently significant energy, to operate.
Mining a bitcoin takes about 2,000 kilowatt-hours of electricity. Gregory Burge, chair and professor of economics at the University of Oklahoma, said this is roughly enough electricity to run an average household for two to three months.
“The big thing about cryptomining: it is incredibly energy intensive. It’s a very energy-intensive endeavor,” Burge said.
Some cryptominers are already drawn to Oklahoma, in large part Burge said, because of the state’s cheap and available energy. As of November 2021, Oklahoma had the second-lowest price of energy in the nation, according to the U.S. Energy Information Administration. Burge said this bill is staking on top of the existing incentives in tax policy for energy businesses.
In early March, when German tech company Northern Data announced it would establish a data center in Pryor in northeastern Oklahoma, its president pointed to the state’s low energy costs as a reason for the decision.
Although the bill could bring more business to Oklahoma, Yuri Hupka, a graduate research assistant at Oklahoma State University, says it won’t provide a large employment boom. It takes about 150 many people to make up a mining operation.
There is some uncertainty when it comes to regulations, and significant concern on how cryptomining impacts the environment.
“A lot of times they like to look at the price and the volatility, and the possibilities for the future, technically, the market possibilities and not much about the environment that we’re in, in terms of regulation,” Hupka said.
The bill passed 29-16 with bipartisan support last week out of the Senate. It now awaits action in the House.
