Crypto firms failed to deliver ‘promised benefits’ from legislature-backed incentives, nonprofit says

Crypto firms failed to deliver ‘promised benefits’ from legislature-backed incentives, nonprofit says
Crypto firms failed to deliver ‘promised benefits’ from legislature-backed incentives, nonprofit says

The Tech Transparency Project, or TTP, a research initiative of the US-based nonprofit watchdog group Campaign for Accountability, has released a report that claims crypto firms “gave little in return” for state governments that offer financial incentives.

In a report released Thursday, the TTP said many crypto firms based in certain US states have “reaped special benefits” for setting up operations while not always delivering jobs, economic growth or tax benefits for residents. According to the group, crypto-lobbyists worked on behalf of firms to get tax breaks and discounted energy prices, while state governments have “faced budget deficits, rising energy consumption and serious environmental damage.”

The research group cited policies dating back to 2017 where state governments including those in Nevada, Wyoming, Montana and Kentucky passed pro-crypto legislation to encourage firms to set up shop. In Montana, for example, TTP reported that politicians passed a law in 2017 that cut property taxes on the data centers used to mine cryptocurrency. Mining companies moved in, only to later see residents complain “of excessive noise, waste and power use” and demand a moratorium.

In Wyoming, where lawmakers passed bills exempting crypto firms from property taxes and there is no state income tax for residents, TTP reported that blockchain payments firm Ripple offered no jobs in the state while crypto exchange Kraken listed just one. In 2020, Wyoming Governor Mark Gordon reported having to consider “devastating but necessary” budget cuts to public departments, with lawmakers reportedly considering similar measures on K-12 education in 2021—though the economic impact of the pandemic may have also played a role.

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The group added:

“At a minimum, the public should have a say in these crypto handouts. Especially in states suffering from financial problems, the perception of innovation should not come before material taxpayer benefit.”

Related: Georgia lawmakers are considering giving crypto miners tax breaks in new law

Kentucky lawmakers voted to remove sales tax from electricity purchased by local crypto mining operators in 2021 and made mining companies eligible for state tax incentives aimed at clean energy companies. A report released by the Office of the State Budget Director in November 2021 estimated that these incentives cost the state approximately $11.6 million each year.

“It is too early to say how much these measures, which went into effect on July 1, will actually cost Kentuckians,” TTP said. “However, several government programs are already facing significant budget pressures, which could be exacerbated by cryptocurrency incentives […] The tax incentives are unlikely to create new jobs in Kentucky.”