(WEHT)– Cryptocurrency, or “crypto,” refers to digital currencies that can be used to buy regulars goods and services They can be bought through exchanges using traditional money or they can be earned through a process called “mining,” which requires certain software to solve complex mathematical equations. A study found Kentucky is the eighteenth best state to mine crypto.
Successful crypto mining relies on good computing power which uses a lot of electricity. For example, a single bitcoin transaction is estimated to use nearly 2,000 kWh of electricity. This is enough to power the average U.S. household for over two months.
Since crypto mining requires so much energy, living in an area with low electricity rates makes mining more profitable. Residents of states with no state income taxes or low state income tax burdens will pay fewer taxes on gains realized on the sale or exchange of currencies, which are treated as capital assets.
To find the best states to mine cryptocurrency, researchers at Commodity.com analyzed data from the U.S. Census Bureau, the U.S. Energy Information Administration, the Bureau of Economic Analysis, and HighSpeedInternet.com, creating a composite score based on the following factors:
- State income tax burden
- Electricity rates
- Cost of living
- Percentage of households with broadband internet
- Average internet speed
Taking these factors into account, the best states to mine cryptocurrency in are North Dakota, Tennessee, and Oklahoma. All three of these states have low or no state income taxes, below-average electricity rates, and low overall living costs, unlike northern and coastal states. Hawaii, New York, California, Connecticut, Maine, and Massachusetts score lowest on the composite index. Despite having strong broadband coverage and high internet speeds, these states have some of the highest taxes, electricity rates, and total living costs in the country.
Here is a summary of the data for Kentucky:
- Composite score: 58.00
- State income tax burden: 2.3%
- Electricity rates (cents per kWh): 10.8
- Cost of living (compared to average): -12.6%
- Percentage of households with broadband internet: 64.8%
- Average internet speed (Mbps): 78.7
Indiana ranked 28 and Illinois ranked 34 among the best to worst states for mining cryptocurrency.