Digital Chamber Opposes Nebraska’s LB526 Bitcoin Mining Tax

The Digital Chamber together with the Digital Power Network have written a legal letter of concern over Nebraska’s Legislative Bill 526 (LB526). This bill is to impose a 2.5 cent per kilowatt hour tax on bitcoin mining as well as other crypto mining.

Mining activities that use more than one thousand kilowatt hours of energy per annum will be taxed. There are fears that the same will slow down innovation and economic development in the state.

Tax Targets Bitcoin Mining Operations

LB526 contains particular financial and operational conditions for the establishment of cryptocurrency mining. For instance, direct payments for infrastructural improvements and the excise tax. These requirements do not apply to other energy-guzzling sectors including data centres and cloud services. This situation the Digital Chamber says leads to a “discriminatory regime”.

In its statement, the Chamber noted that a number of crypto mining companies balance their load by reducing their consumption during the times of high demand. This is a crucial function that sets the sector apart from other forms of operation that are availing themselves on a round the clock basis.

The Chamber pointed out that it will prevent Nebraska from attracting investment since it will be compared to states that have more favorable policies for investors.

Economic Growth at Stake

The Chamber pointed out that crypto-mining creates jobs and contributes to the development of infrastructure. This paper also acknowledges that mining operations work with RE providers, upgrade the grid, and implement demand response in order to improve energy management.

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The provisions of the tax and prepayment requirements can effectively discourage these investments. In the letter, the Chamber pointed out that “LB526 threatens Nebraska’s ability to compete in the growing digital economy,” and recommended that policymakers focus on cooperation rather than penalty.

LB526 also allows public power districts to place conditions on mining operations such as the payment for upgrading infrastructure. The Chamber however noted that while grid stability is important, it created potential for arbitrary enforcement and additional layers to Nebraska’s public power system.

Supporting Innovation Through Policy

A growing number of cryptocurrency miners have realized that it is more efficient to power their systems using renewable energy sources. However, as it stands now, LB526’s tax and regulatory measures can stifle such advancements in Nebraska.

The Chamber proposed tax holidays or tax credits to encourage miners to embrace renewable energy sources to encourage more investment in the industry while at the same promoting sustainable mining.

In its letter, the Chamber closed by asking Nebraska lawmakers to oppose LB526 and to advance instead more rational policies for the state’s economy and energy future.  These actions, they argue, will position Nebraska as a leader in the evolving digital economy.