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

Crypto firms failed to deliver 'promised benefits' from lawmaker-backed incentives, says nonprofit

The Tech Transparency Project (or TTP), a research project of the United States-based non-profit watchdog group Campaign for Accountability has published a report that claims crypto firms “provided little return” for states offering financial incentives.

TTP released a report Thursday stating that crypto firms located in certain states of the United States have “reaped special advantages” for setting up operations, while not always delivering tax benefits, jobs, or economic growth to residents. According to the group crypto lobbyists lobbied for firms to get tax breaks and lower energy prices, while state governments faced budget shortfalls, increased energy consumption, and severe environmental damage.

A new TTP report outlines favorable laws and tax breaks given by various state governments–stretching from Nevada and Wyoming to Kentucky–to speculative crypto projects that did not produce the promised job creation and social benefit for taxpayers. https://t.co/ZEkqyQCCa1
Tech Transparency Project (@TTP_updates), August 4, 2022

According to the research group, policies dating back to 2017 were cited by states such as Kentucky, Wyoming, Montana, and Nevada that have passed pro-crypto legislation in an effort to encourage firms to open shop. The TTP reported that Montana policymakers adopted a 2017 law to reduce property taxes for data centers that are used to mine cryptocurrency. Miners moved in only to see residents complaining about noise, waste, and power consumption and calling for a moratorium.

Wyoming lawmakers passed bills exempting cryptocurrency firms from property taxes. Residents do not pay state income tax. The TTP reported that Ripple, a blockchain-based payments company, offered no jobs to the state while Kraken, a crypto exchange, listed one job. Wyoming Governor Mark Gordon stated that in 2020, he had to consider budget cuts for government departments. Legislators are reportedly looking at similar actions on K-12 education in 2021, though the economic impact from the pandemic could also have played a part.

The group also added:

“At the minimum, the public should be able to have their say in these crypto-handouts. Particularly in countries with economic problems, innovation should not be equated with material taxpayer benefits.

Related: Georgia legislators consider tax exemptions for crypto miners in new bill

Kentucky legislators voted to eliminate sales tax on electricity purchased by crypto mining operators in 2021. They also made mining companies eligible for state tax incentives for clean energy businesses. The Office of the State Budget Direct released a report in November 2021 estimating that these incentives cost the state approximately $11.6 million annually.

The TTP stated that it was too early to know how much the measures, which took effect July 1, will cost Kentuckians. “But many state programs already face significant budget pressures, which could be exacerbated with the cryptocurrency incentives The tax incentives also are unlikely to create any new jobs in Kentucky.

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