Following China’s decision to kick out bitcoin (BTC) miners from the country in 2021, the United States quickly emerged as the new darling of the bitcoin mining industry. It’s currently one of the world’s largest mining destinations, accounting for nearly 40 percent of all bitcoin miners.

Hundreds of thousands of pieces of mining equipment worth billions of dollars are connecting to electrical grids across the US, bringing new tax revenue for local governments, significant profits for many miners, and worries about power consumption and environmental effects.

Crypto mining in America

The state of crypto mining in the United States varies widely across different regions. Some states have more favorable conditions for crypto mining than others based on their electricity prices, tax policies, regulatory frameworks, and renewable energy potential.

But there are other important factors to consider, such as state political climates, real estate costs, the cost of living, and quick and dependable internet connectivity.

The states with the most abundant and inexpensive power and lax or even crypto-incentivized regulation tend to have the most optimal conditions for crypto mining and widespread mining activity.

In this article, we’ll look at some states whose mining capacities, electricity costs, and crypto regulations make them more amenable to crypto mining. Given the hostile attitude the Federal government has lately adopted towards the crypto industry, it is vital information.

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However, you should note that our assessment only provides a glimpse of the current crypto-mining scenario since the industry is in constant flux.

While some jurisdictions actively attempt to entice miners, others have adopted a more conservative strategy or even taken their welcome mats entirely off the table. Therefore, we didn’t include jurisdictions like California, which, despite carrying a substantial share of the US hash rate, appears to be moving in a less mining-friendly direction.

Others, like North Dakota, make up a far smaller portion of the US’s overall hash rate, but they appear to be well on their way to a future where cryptocurrencies are more prevalent.

Let’s now look at the states currently flying the crypto flag in the US:

Nebraska

Nebraska is one of the US states that has attracted many crypto miners thanks to its low electricity costs and reliable service.

Despite ranking in the top ten for both lowest electricity rates and hash rate share (4.7% by January 2022), Nebraska receives far less attention from the mining industry than some other states.

Interestingly, in addition to centralized access to a broad range of energy sources, Nebraska provides particularly advantageous crypto regulation, including crypto banking programs.

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The Cornhusker State established its bank charter system in 2021 and is leading the way in fostering cryptocurrency banking.

Regarding electricity costs, the average price for residential customers in 2020 was 11 cents per kilowatt hour, which was lower than the national average of 13 cents. The industrial sector had the lowest price at 7 cents per kilowatt hour, while the commercial sector had a similar price to the residential sector at 9 cents per kilowatt hour. 

The state produces more than it consumes and generates about one-third of its electricity from renewable sources.

One of the major players in the state’s bitcoin mining industry is Compute North, a data infrastructure and colocation company that provides hosting services for crypto miners and other high-performance computing applications.

Compute North operates a 100MW campus in Kearney, Nebraska, its largest and most advanced facility. The campus features modular data centers that accommodate large-capacity users with over 1MW of requirements. 

The campus also includes Compute North’s first GPU computing module, which can handle machine learning, artificial intelligence, and blockchain tasks.

Compute North claims that its expansion in Kearney represents the company’s next step in “Mining 2.0”, which requires the ability to effectively manage mining and data center operations and market expertise to manage power costs actively. 

The company also says it contributes to the local economy by creating jobs, paying taxes, and supporting renewable energy projects.

Wyoming

With its abundant natural resources and energy, Wyoming has the potential to be a bitcoin mining hotspot. It has low electricity rates, favorable tax policies, and supportive regulations for crypto miners. 

The state also has a cold climate, which helps reduce cooling costs for mining equipment.

According to reports, Wyoming intends to house at least 5% of the bitcoin mining hash rate in the United States by the next halving in May 2024. This would create jobs, revenue, and innovation for the state.

It already hosts some of the largest bitcoin mines in the world, such as Blockcap’s facility in Rock Springs. Additionally, more developers are planning to build new mines in Wyoming soon.

Senator Cynthia Lummis (R) of Wyoming owns cryptocurrency and strongly supports crypto legislation in Washington, DC.

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The state also boasts several laws and regulations that support the development and adoption of blockchain technology and digital assets. Some of these laws include:

• The Wyoming Money Transmitter Act exempts virtual currency from money transmission laws and licensing requirements.
• The Wyoming Utility Token Act creates a new class of digital assets called “open blockchain tokens” not subject to securities laws if they meet certain criteria.
• The Wyoming Special Purpose Depository Institution Act allows the creation of state-chartered banks that can provide custody and banking services for digital assets.
• The Wyoming Digital Asset Custody Act establishes standards and procedures for custodial services of digital assets, including fiduciary duties, audits, and cybersecurity requirements.
• The Wyoming Blockchain Filing System Act, which authorizes the use of blockchain technology for corporate records and filings

These laws aim to provide clarity and certainty for crypto businesses and investors in Wyoming and foster innovation and economic growth in the state.

It has also attracted several prominent crypto companies and organizations to establish their presence there, such as Kraken Bank, Avanti Bank & Trust, IOHK (the company behind Cardano), and the American CryptoFed DAO.

Furthermore, the cost of electricity in Wyoming is one of the lowest in the US. According to the US Energy Information Administration, the average residential price of electricity in Wyoming was $0.093/kWh in November 2022, compared to the national average of $0.137/kWh.

Commercial and industrial power rates are $0.0824/kWh and $0.0603/kWh, respectively. The state’s retail electricity cost is 18.33% lower than the national average.

Wyoming’s low electricity cost is mainly due to its abundant coal resources, which account for about 85% of its electricity generation.

Texas

Texas consistently ranks at or close to the top in mining capacity. By July 2022, Texas accounted for at least 25% of all mining activity in the US, which is why the state is sometimes referred to as the “Bitcoin mining capital” of the United States.

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The state has attracted many entrepreneurs and investors who want to exploit its cheap and abundant electricity, deregulated power grid, and friendly regulatory environment.

Even without the extra discounts offered to crypto miners, electricity is still reasonably priced, albeit the state’s independent power infrastructure has had some dependability issues.

Texas is also one of the most crypto-friendly states. In 2021, the state passed legislation recognizing the legal status of cryptocurrencies and allowing banks to offer crypto custody services to their customers.

The state also offers tax breaks, training, and other incentives to help promote crypto mining. 

Miners can set up their rigs in rural locations with no residential homes in pursuit of low electricity and land rates and minimal nuisance to local communities.

For these reasons, several large-scale facilities are under construction or already operating in the state, including Whinstone US, owned by Riot Blockchain, the largest bitcoin mining facility in North America, based in Rockdale, Texas. It has a capacity of 750 megawatts (MW) and can produce 500 bitcoins per month.

Argo Blockchain, a Canadian crypto mining company, is also building a 320-acre mining facility in Dickens County, Texas. It will have a capacity of 200 MW and be powered by renewable energy sources.

Other firms taking advantage of Texas’ crypto-friendly policies include Texas Pacific Land Corporation (TPL), Mawson Infrastructure, and JAI Energy, which have partnered to build a facility that guarantees 60 MW of bitcoin mining on TPL’s property in West Texas.

Kentucky

Kentucky might have largely gone unnoticed as a crypto mining destination, but by early 2022, it ranked a close second to Texas with 10.9% of the US hash rate.

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The state’s low cost of living, proximity to regional energy networks, and the recent passage of several tax incentives for crypto mining make it ideal for miners.

The first bill, HB 230, exempts crypto miners from paying sales tax on electricity and equipment used for mining. The second bill, SB 255, offers a 6% corporate income tax credit for energy-intensive industries such as Bitcoin mining.

According to Blockware Solutions, a crypto mining firm based in Kentucky, these tax incentives make Kentucky one of the most attractive states for Bitcoin mining in the US. 

Blockware Solutions has raised $25 million to expand its bitcoin mining operations in Kentucky and plans to buy 14,000 rigs—8,000 for itself and 6,000 to sell. The company claims it can mine one Bitcoin for about $4,500 in Kentucky.

North Dakota

North Dakota is conducive to bitcoin mining because of its abundant natural gas resources and commitment to environmental stewardship. 

The average electricity prices in North Dakota for homes, businesses, and industries are $0.09/kWh, $0.08/kWh, and $0.0655/kWh, respectively. Residential rates are 23.7% less expensive than the $0.118/kWh national average in the United States, while commercial rates are 20.5% less expensive than the $0.10/kWh average.

The state has a large amount of natural gas, often flared or wasted as a byproduct of oil drilling. This flaring contributes to greenhouse gas emissions and climate change. It has caused some companies, such as ExxonMobil and Crusoe Energy Systems, to find a way to use this wasted gas to generate electricity for bitcoin mining and reduce emissions while creating value from an otherwise wasted resource. 

Another factor that makes North Dakota attractive for bitcoin mining is its potential for developing renewable energy. A crypto mining company called Bitzero announced that it plans to make North Dakota its headquarters and hub for all North American operations. 

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Bitzero aims to use renewable energy sources such as wind and solar to power its data centers, employing up to 20 people in the state.

Another major project in this field is the Atlas Power Data Center built by FX Solutions Inc. near Williston, North Dakota. According to its proponents, the project will be one of the largest data centers worldwide, with a capacity of up to 700 megawatts of electricity.

The data center will house tens of thousands of servers conducting high-performance computing using alternative power generation, such as natural gas, that would otherwise be flared off. 

The project is expected to create over 100 construction jobs and more than 30 permanent ones.

Bitcoin mining in North Dakota is part of a larger trend of data centers and cryptocurrency mining emerging as a hub for high-performance computing in the state. Its reliable, affordable, redundant power supply and climate that lowers cooling costs for data center operations make it an attractive location for the sector. 

Additionally, North Dakota’s “all-of-the-above” energy approach and nation-leading efforts in carbon capture, utilization, and storage support environmental stewardship while attracting high-paying jobs and diversifying the economy.

Conclusion

As previously stated, cryptocurrency mining is a lucrative but competitive activity affected by various factors such as electricity rates, tax laws, internet speed, and cost of living. And based on these criteria, we have deduced that some of the best states for crypto mining in the US are Nebraska, Wyoming, Texas, Kentucky, and North Dakota.

These states offer low or no state income taxes, cheap and abundant power sources (often renewable), fast and reliable internet connections, and affordable living expenses.

Crypto miners looking for a good and friendly location should consider these states as their top choices.