Topic: What is the advantages to mine in USA ? (Read 424 times)

Agreed. Several years ago the hosting companies that were in the Portland OR/Seattle WA found that out the hard way. When Alcoa shut down their aluminum foundries in the areas the local (hydro) power companies had massive amounts of power available with no users so they did great deals -- for a while. Once Canada ran lines to connect that power to the Canadian power grid it was a whole 'nother story and because the miner hosting companies had no long-term contracts in place they were forced to leave or at best massively scale back their operations.

That linked article tells us that Core Scientific and Riot both have taken the cutbacks as a planed-for part of their business which is good. Now just how long their contracts are valid before being up for renegotiation is another story. Hopefully they are set for several years...

2 good things about that:
a.Those companies had already planned for the power cutbacks to be part of expected operations. In the past that was very rare to see and most 'business plans' were based on pie-in-the-sky perfect operations with no surprises so when the proverbial butterfly in South America flapped its wings at the wrong time said companies were seriously boned.

b. It will make for some nice seasonal dips in difficulty

USA mining has some good points, but like you say the fucking legal bs is tough to wade through.

We will have the 280-305kwatt solar array in Clifton which will be about 70-75 kwatts (24/7/365) of 'free' power ready in early Sept this year.

Completely created due to mining coins. But the paper work is endless. And who is to say that the power buyback agreement will stay in place as it is meant to do for next 30 years.

Not debating that, the problem is the whats and whens and how longs so so speak.
A few really hot summers followed by a few cold winters can change the dynamics a lot vs a few mild years in a row.

Even eliminating that the biggest issues I have been seeing with miners (and sadly a lot of other businesses) is they move to locations on promises of "X" and then "Y" happens and they get "Z"
WAYYYYYY back in time when I was in college a professor said it best and I'm mangling the wording but I think I make the point.

"If you business plan at all involves the words, tax abatement, government subsidies, or any kind of lower rates for any needed materials or services it's not a good business plan"
"Yes many businesses get them and succeed, but for the ones that had the "guaranteed subsidies" changed at the whim of the government or provider or vendor we just hear about the lawsuits from the bankrupt businesses"

It's nice to say that the losses on the mines in Texas are really just socialized losses among the other rate payers. BUT at what point does some other business that may have more employees and more facilities and therefore more clout / power within the region say "So these new miners are getting all these deals, where are ours?" And then the lawsuits and fights begin.

If ERCOT in Texas or the power company in upstate NY wakes up one morning and said "fuck the miners we can make SOOOOO much more money selling to these people" and changes the rules. YES there will be lawsuits and lots of articles in the local papers and local news. Possibly a blurb in the regional news. And after that the only thing that matters is who has the bigger better legal team and more time to fight it out in court.

Since this is about advantages of mining in the USA I will bring it back to the fact that you can move. You miners will not be confiscated, you will not be forced into hiding by the government. But everything else.
It's nice to have, but don't plan on having it forever.

-Dave

It may be that they will get some kind of compensation for the time that they have to be offline to save power. Still this will be a fixed rate that is set in a contract and if the next bullrunn happens and they can't mine for some reason they will be pretty fucked up because they will only get a small compensation. If I had the option I would only mine where I had full control if I go offline or not.

Those large farms in Texas were brought online fully expecting the cutbacks and as part of their contracts the farms are partly reimbursed by their electric providers for the lost revenue to encourage the farms cutting back when needed. I've made mention several times in the past about the service agreements they have in place and provisions for them cutting back/temporarily shutting down operations to ensure adequate power for the rest of the states consumers.

Well here in NE Oklahoma we have Hydro and wind from the south as well. Where I am at I have 4.3 cents per kwh. That's why we have Google and many other large consumers here. Lots of free commercial space as well.

Northern Data has inked a deal Grand River Damn Authority for 250Mw mining op.

Side note but important; miners as a rule are on the bottom of the food chain in terms of who gets power:

https://insidebitcoins.com/news/extremely-high-temperatures-in-texas-force-crypto-miners-to-go-offline

Come to Texas to mine....it will be great....unless it gets hot.
I am 100% sure that just about every place is going to do this but it seems to be happening more and more in hotter locations. Businesses get lured into locations with the promise of cheap power / taxes / labor / whatever and when something happens they take the hit. It's easier to tell a mine to shut down then 10000 people to shut off their air conditioners.

-Dave

Interesting thanks. Do you have any website to recommend for searching such facilities?
I always struggle to find online the available power at the facility and often owner are wrong regarding this information.

Many thanks,

Larson311

I think the best country for a first business is your home country. In some countries, economic freedom and property rights are not always respected, but there are no taxes on mining and there is cheap electricity. The US has very expensive lawyers and very strict control.

Economic freedom /property rights would be the main advantage. The government can't just confiscate the mining farm or Bitcoins as long as you follow the law. Banning cryptocurrency or mining is very difficult since it needs to pass the legislative and judicial branches.

For taxes, yes the rates are high... but there are so many depreciation incentives that the effective tax rate can be as low as zero as long as you keep re-investing in more equipment.

Finally, there are big established power markets like ERCOT or PJM where you can buy lots of energy with lots of options for the contract structure. As an example, Riot Whinstone has a fixed ERCOT contract for 2.9¢/kWh. They have massively profited because now the energy price in Texas has doubled.

If you want to mine in the U.S., I recommend the Midwest since there are less mining farms there and they won't crack down on mining like 'Noo Yawk'. You might pay more for power but the weather is cooler than Georgia or Texas or Oklahoma.

I suggest we get back to the topic. Are there any advantages of mining in the USA versus other countries? What country has the most crypto-friendly/mining-friendly policy regarding taxes and benefits?

It looks like you are correct when it comes to New York. Other states have similar exemptions for equipment used in producing products.

You are talking about a few separate things.

If you are running a business (that in theory is making money) in New York those items are tax exempt.
If you are buying them to run for people then depending on how you do your service it may or may not have taxes in NY
If you are buying them to run for yourself but selling the hash to others then it's taxable.

The above 3 lines can also be 100% wrong depending on how you setup your business and contracts and deal with other things.

This is why tax lawyers and accountants charge so much.

-Dave

Sales tax/use tax absolutely is important because it means getting 5% to 9% less equipment for the same price. Same with import tariff or VAT. There are strategies to defer sales tax for up to a year, but it needs to be paid eventually. That's why it's worth considering zero sales tax states like MT/NH/OR as long as the power is cheap enough. If you're selling hashrate to customers in the U.S., that can be considered a taxable service in some states like Texas, while other states like Pennsylvania don't tax it.

maybe.

but you need to determine its cost.

that can be complex.

If you sell a used machine is consider a sale, righ?

Sales tax has nothing to do with mining.
If you are only worried about power cost then for a large farm you are doing it wrong.
If you can move into an empty DC or factory or other facility that already has all or at least most of the power / cooling / infrastructure you are already there.
Because doing it properly can cost 10s of millions and take months.

If you want to do it quick and dirty then yes you can move in just about anywhere with cheap power, then all you have to worry about is the infrastructure failing or not having stable power.

-Dave

Sales TAXx and Income TAX

how does that works
what is the calculation ?

Don't start a mining farm in 'Noo Yawk'. If you make a profit, they have a ridiculous income tax. They charge a ridiculous sales tax too. The power rate is much higher than 3-4 cents unless you sign a deal directly with a power plant. The publicly available rate at 1 MW is probably 5-6 cents in the west/central load zone. The state as a whole is unfriendly to the crypto industry. The only advantage will be the low temperature.

I recommend finding a state which isn't a stereotypical mining state like WA/TX/NY, browsing through the utility tariff documents, and hopefully finding a place that offers ~5 cents without having too much competition from other miners. Don't choose a location which is too hot, like southern/west TX, AZ or NM. I've heard of a large farm located in NJ moving to OH this month, so you might want to consider that state as the weather is cooler.

I can also give you a list of states where you can't find power for < 6 cents anywhere in the state: CA, NJ, FL, CT, MA, RI, PA, DE, MD, VA. Disregard these states entirely.

1) Depends on how you do things in terms of selling the coins and writing off costs and many other things. There is no simple answer. 
2) Last I heard the hydro places were paying between $0.03 and $0.04 but that was 2020 & 21. No idea now.
There seems to be a push against it in NY at the moment, will have to see how that plays out but for now

https://www.power-eng.com/renewables/new-york-hydropower-site-fully-dedicated-to-cryptocurrency-mining/

-Dave