Nebraska Bill Proposes $0.025/kWh Excise Tax on Bitcoin Mining

Nebraska State Senator Mike Jacobson has introduced a bill at the request of Governor Jim Pillen, aiming to impose an excise tax of $0.025 per kilowatt-hour on Bitcoin and cryptocurrency mining operations.

The Nebraska state record shows that legislative Bill 526 (LB526) was introduced on Jan. 22 and referred to the Revenue Committee on Jan. 24. A public hearing is scheduled for Feb. 12 to discuss the bill’s provisions and gather input from stakeholders. If enacted, the bill’s provisions would take effect on Oct. 1.

Under LB526, cryptocurrency mining operations consuming more than 1,000 kilowatt-hours annually would be subject to an excise tax of two and one-half cents per kilowatt-hour.

The bill would also grant public power districts the authority to require cryptocurrency mining businesses to make direct payments or provide letters of credit to cover costs associated with necessary infrastructure upgrades. Any financial assurances imposed by public power districts must be fair, reasonable, and nondiscriminatory. Before implementing such requirements, public power districts must conduct an independent grid impact study to assess the financial burden of infrastructure enhancements.

The tax would apply exclusively to cryptocurrency mining entities and would not extend to data processing centers, cloud computing, or other industrial or commercial operations. The Nebraska Department of Revenue would be responsible for enforcing the tax, with proceeds directed to the state’s General Fund.

It remains unclear how far the bill will advance in the legislative process. Several notable companies, including Marathon Digital (NASDAQ: MARA) Holdings (MARA) and Compass Mining, have Bitcoin mining operations in Nebraska. In July 2023, FoundryUSA Pool reported that Nebraska accounted for approximately 0.92% of its 109 EH/s hashrate, suggesting around 1 EH/s of hashing power in the state at that time.