TTP Report: Crypto Tax Incentives Return Little Public Benefit
FOR IMMEDIATE RELEASE: August 4, 2022
Contact: Michael Clauw, firstname.lastname@example.org, 202.780.5750
WASHINGTON, D.C. – Today, Campaign for Accountability (CfA) a nonprofit watchdog group that runs the Tech Transparency Project (TTP), released a report examining a series of favorable laws and tax breaks given by various state governments to speculative crypto projects that did not produce the promised job creation and social benefit for taxpayers. TTP’s review of state legislation, local government records, corporate statements, and other public documents revealed a string of examples—stretching from Nevada and Wyoming to Kentucky—in which the crypto industry reaped special benefits while failing to deliver much in return.
Campaign for Accountability Executive Director Michelle Kuppersmith said, “It’s understandable that states want to establish themselves as innovation leaders, but the crypto tax breaks are creating the perception of innovation rather than material benefits for taxpayers. These crypto operations often bring excessive energy use, waste, and noise, and communities are often left worse off than before their state wrote the crypto industry a check.”
Kentucky—a state whose programs were already facing significant budget pressure— passed a pair of bills that promised millions of dollars in giveaways to cryptocurrency mining operations. A state report estimated the combined cost of these new crypto tax incentives at $11.6 million per year.
The new incentives only went into effect last month, but if the crypto industry’s past use of Kentucky’s traditional tax incentives is any indication, the prospects for efficient job creation are not promising. The state in 2021 awarded $200,000 in traditional income tax credits to Blockware Mining LLC to support a new facility. While the company promised at the time that the facility would create 20 new jobs, as of May 2022, it only employs 10.
Wyoming—where the Wyoming Blockchain Coalition has created a ripe environment for crypto lobbyists—is also seeing little job creation in return for its coziness with the industry. In a supposed coup for Wyoming, crypto exchange Kraken obtained a bank charter in the state after new, crypto-friendly laws went into effect in 2018. But of the more than 280 positions for which Kraken is currently hiring worldwide, only one is located in Wyoming. Ripple, a blockchain-based payments firm that also recently registered in Wyoming, is not hiring for any positions in the state.
In Nevada, software company Blockchains LLC purchased nearly 70,000 acres of land with the goal of turning it into a futuristic model city centered around blockchain technology. The company then joined other crypto interests in lobbying for a slate of pro-crypto bills, which successfully passed in 2019. Nevertheless, the development resulted in significant controversy—straining water resources and facing opposition from Native American tribes—and was eventually abandoned in October 2021.
Ms. Kuppersmith continued, “These examples should serve as a cautionary tale for state officials who are intent on joining the race to the bottom in the courting of crypto interests. The story of tech firms getting massive tax breaks for a disproportionately small public benefit is nothing new, and state officials shouldn’t be fooled into thinking that new crypto technologies will deliver anything but the same old results.”
Campaign for Accountability is a nonpartisan, nonprofit watchdog organization that uses research, litigation, and aggressive communications to expose misconduct and malfeasance in public life and hold those who act at the expense of the public good accountable for their actions.