KRS 139.516 — Exemption for sale or purchase of electricity used in commercial mining of cryptocurrency

(1) As used in this section:
(a) "Blockchain technology" means shared or distributed data structures or digital
ledgers governed by consensus protocol s and maintained by peer -to-peer
networks that:
1. Store digital transactions; and
2. Verify and secure transactions cryptographically;
(b) "Colocation facility" means a facility which houses tangible personal property
that functions as a computing system node or nodes, or hosts such node or
nodes, in the commercial mining of cryptocurrency and which the computing
system node or nodes of the facility consume no less than two hundred
thousand (200,000) kilowatt hours of electricity per month;
(c) "Commercial mining of cryptocurrency" means the process through which
blockchain technology is used to mine cryptocurrency at a colocation facility;
(d) "Consensus protocol" means a set of rules and procedures that control how
and when blockchain transactions are ve rified, validated, recorded, and
recognized;
(e) "Cryptocurrency" means a type of virtual currency that utilizes blockchain
technology and that:
1. Can be digitally traded between users; or
2. Can be converted or exchanged for legal tender;
(f) "Mine" means the process through which blockchain transactions are verified
and accepted by adding the transactions to a blockchain ledger, which
involves solving complex mathematical cryptographic proble ms associated
with a block containing transaction data; and
(g) "Peer-to-peer networks" has the same meaning as in KRS 42.747.
(2) (a) The tax imposed by KRS 139.200 or 139.310 shall not apply to the sale or
purchase of electricity that is used or consume d in the commercial mining of
cryptocurrency.
(b) Applications for the exemption shall be made on or after July 1, 2021, and on
or before June 30, 2025.
(c) The exemption shall apply to electricity sold or purchased on or after the
effective date of application and before July 1, 2030.
(3) (a) To qualify for the exemption provided in subsection (2) of this section, each
person seeking the exemption shall file an application for each location when
the commercial mining of cryptocurrency takes place in this state.
(b) The application shall be in the form prescribed by the department and shall
include:
1. The name and mailing address of the person seeking the exemption;
2. A description of the person's business activities;
3. The business location where the operations will be located, including the
street address, city, and county; and
4. Any other information the department may require.
(4) If the application is approved by the department:
(a) The department shall issue a certificate which shall be effective a s of the date
of the application. The effective date of the application shall be:
1. The postmark date, if a paper application is filed;
2. The date received at the department's office, if an application is
delivered in person; or
3. The electronic time stamp, if the application is filed electronically; and
(b) The approved applicant shall report the amounts of the tax exemption claimed
in subsection (2) of this section from the date of application to September 1,
2021, on or before November 1, 2021, and for each fiscal year thereafter on or
before each November 1, as long as the exemption applies.
(5) On or before January 1, 2022, and on or before each January 1 thereafter as long as
the exemption applies, the department shall report to the Interim Joint C ommittee
on Appropriations and Revenue:
(a) The total amount of tax exemption that has been claimed for the immediately
preceding fiscal year; and
(b) The total cumulative amount of the exemption claimed.