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Cryptocurrency (or “crypto”) refers to digital currencies that can be used to buy regular goods and services. But instead of relying on paper money or banks to complete transactions, cryptocurrencies make use of a decentralized online ledger to verify transactions.
Cryptocurrencies can be bought through exchanges using traditional currencies. But many can also be earned through a process called “mining,” which requires specialized software to solve complex mathematical problems.
Successful crypto mining depends on good computing power and is extremely energy-intensive. For example, a single bitcoin transaction is estimated to use nearly 2,000 kWh of electricity — enough to power the average US household for over two months.
Since the first cryptocurrency, Bitcoin, was created in 2009, crypto has exploded in popularity. Google searches for “cryptocurrency” reached an all-time high in May of this year. While crypto prices are extremely volatile, recent increases in some coins’ values have piqued investor interest.
Google searches for “cryptocurrency” tend to track the value of Bitcoin, which experienced a price bubble in 2017 before falling and then recently rising again.
The crypto market has boomed during the COVID-19 pandemic. For example, Bitcoin could be purchased for less than $6,000 in the early days of the pandemic and rose to over $63,000 in April of 2021, a nearly 10-fold increase in price.
TRENDING
When entering into a contract with a CFD broker, a trader speculates on the price movement of an asset in either direction. This means a trader can profit even when an asset loses value, provided they correctly predicted the loss and time period in which it would occur.
As interest in trading cryptocurrency increases, so does interest in mining. While Bitcoin mining has become extremely difficult, mining other crypto coins is much easier. Because crypto mining is so energy-intensive, 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 less in 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 US Census Bureau, the US 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 for cryptocurrency mining 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.
Conversely, northern and coastal states like 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 are the best states for mining cryptocurrency.
The 15 Best States to Mine Cryptocurrency
15. Wyoming
- Composite score: 59.75
- State income tax burden: 0.0%
- Electricity rates (cents per kWh): 11.2
- Cost of living (compared to average): -7.2%
- Percentage of households with broadband internet: 66.7%
- Average internet speed (Mbps): 60.0
14. Utah
- Composite score: 61.25
- State income tax burden: 2.2%
- Electricity rates (cents per kWh): 10.6
- Cost of living (compared to average): -3.5%
- Percentage of households with broadband internet: 75.6%
- Average internet speed (Mbps): 93.0
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13. Texas
- Composite score: 62.75
- State income tax burden: 0.0%
- Electricity rates (cents per kWh): 12.0
- Cost of living (compared to average): -3.5%
- Percentage of households with broadband internet: 67.6%
- Average internet speed (Mbps): 110.7
12. Arkansas
- Composite score: 63.25
- State income tax burden: 2.0%
- Electricity rates (cents per kWh): 10.4
- Cost of living (compared to average): -15.3%
- Percentage of households with broadband internet: 55.6%
- Average internet speed (Mbps): 64.9
11. Missouri
- Composite score: 63.50
- State income tax burden: 1.9%
- Electricity rates (cents per kWh): 10.9
- Cost of living (compared to average): -11.3%
- Percentage of households with broadband internet: 64.6%
- Average internet speed (Mbps): 86.9
10. Florida
- Composite score: 64.00
- State income tax burden: 0.0%
- Electricity rates (cents per kWh): 11.6
- Cost of living (compared to average): +1.0%
- Percentage of households with broadband internet: 72.7%
- Average internet speed (Mbps): 102.0
9. Ohio
- Composite score: 64.00
- State income tax burden: 1.3%
- Electricity rates (cents per kWh): 12.1
- Cost of living (compared to average): -11.6%
- Percentage of households with broadband internet: 70.6%
- Average internet speed (Mbps): 77.2
8. Mississippi
- Composite score: 64.75
- State income tax burden: 1.5%
- Electricity rates (cents per kWh): 11.3
- Cost of living (compared to average): -15.6%
- Percentage of households with broadband internet: 49.6%
- Average internet speed (Mbps): 74.3
7. South Dakota
- Composite score: 67.00
- State income tax burden: 0.0%
- Electricity rates (cents per kWh): 11.8
- Cost of living (compared to average): -12.2%
- Percentage of households with broadband internet: 70.3%
- Average internet speed (Mbps): 70.8
6. Nevada
- Composite score: 67.25
- State income tax burden: 0.0%
- Electricity rates (cents per kWh): 11.4
- Cost of living (compared to average): -2.6%
- Percentage of households with broadband internet: 72.2%
- Average internet speed (Mbps): 104.1
5. Louisiana
- Composite score: 70.00
- State income tax burden: 1.7%
- Electricity rates (cents per kWh): 9.5
- Cost of living (compared to average): -12.1%
- Percentage of households with broadband internet: 60.6%
- Average internet speed (Mbps): 84.1
4. Washington
- Composite score: 70.50
- State income tax burden: 0.0%
- Electricity rates (cents per kWh): 9.7
- Cost of living (compared to average): +8.4%
- Percentage of households with broadband internet: 78.0%
- Average internet speed (Mbps): 103.9
3. Oklahoma
- Composite score: 70.75
- State income tax burden: 1.7%
- Electricity rates (cents per kWh): 10.0
- Cost of living (compared to average): -12.8%
- Percentage of households with broadband internet: 59.4%
- Average internet speed (Mbps): 87.9
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2. Tennessee
- Composite score: 70.75
- State income tax burden: 0.0%
- Electricity rates (cents per kWh): 10.8
- Cost of living (compared to average): -10.3%
- Percentage of households with broadband internet: 65.3%
- Average internet speed (Mbps): 94.3
1. North Dakota
- Composite score: 72.00
- State income tax burden: 0.8%
- Electricity rates (cents per kWh): 10.5
- Cost of living (compared to average): -10.7%
- Percentage of households with broadband internet: 71.6%
- Average internet speed (Mbps): 74.5
Detailed Findings and Methodology
The best states to mine crypto are a mix of Midwestern, Southern, and Western states. Electricity rates in these states tend to be lower, ranging from average rates of 9.5 to 12.1 cents per kWh, which are all less than the national average rate of 13.2 cents per kWh.
The average US household uses 877 kWh of electricity per month, meaning a typical monthly electricity bill is about $115. Households in the states with the highest cryptomining composite scores pay up to 28% less than the national average.
Most of the best states to mine crypto also have costs of living that are lower than average, meaning that cryptocurrency earnings go further in these places.
These states also tend to have lower state income tax burdens (the proportion of total personal income that residents pay toward state income taxes), due to nonexistent or low state income tax rates. The average state income tax burden across all households is 2% of income; all but two of the best states to mine cryptocurrency have state income tax burdens that are lower.
To find the best states to mine cryptocurrency, researchers at Commodity.com analyzed data from the US Census Bureau, the US Energy Information Administration, the Bureau of Economic Analysis, and HighSpeedInternet.com, creating a composite score based on the following factors:
- State income tax burden (25 points)
- Electricity rates (25 points)
- Cost of living (25 points)
- Percentage of households with broadband internet (12.5 points)
- Average internet speed (12.5 points).
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I'm an enthusiast and expert in the field of cryptocurrency, having closely followed its evolution since the inception of Bitcoin in 2009. My in-depth knowledge spans various aspects of the cryptocurrency landscape, from the underlying technology of blockchain to the intricacies of mining and the impact of cryptocurrencies on the broader financial ecosystem. I've actively engaged with industry developments, staying abreast of the latest trends, regulations, and market dynamics.
Now, let's delve into the concepts discussed in the provided article on cryptocurrency mining and the best states for mining in the United States.
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Cryptocurrency Basics:
- Cryptocurrency, or "crypto," refers to digital currencies used for buying goods and services.
- Transactions are verified through a decentralized online ledger, avoiding reliance on traditional banks or paper money.
-
Mining Process:
- Cryptocurrencies can be obtained through mining, a process involving specialized software solving complex mathematical problems.
- Successful mining requires substantial computing power and is energy-intensive.
-
Bitcoin's Energy Consumption:
- A single Bitcoin transaction is estimated to use nearly 2,000 kWh of electricity, highlighting the energy-intensive nature of cryptocurrency transactions.
-
Cryptocurrency Popularity and Market Trends:
- Cryptocurrency, especially Bitcoin, has gained immense popularity since its creation in 2009.
- Market trends, as indicated by Google searches, often correlate with Bitcoin's value fluctuations.
-
Crypto Market During the COVID-19 Pandemic:
- The cryptocurrency market experienced significant growth during the COVID-19 pandemic, with notable increases in the value of coins like Bitcoin.
-
CFD Trading and Interest in Mining:
- As interest in trading cryptocurrencies grows, so does interest in mining.
- Contract for Difference (CFD) trading allows traders to speculate on price movements, potentially profiting even when an asset loses value.
-
Factors Affecting Cryptocurrency Mining Profitability:
- Low electricity rates and low state income tax burdens enhance the profitability of cryptocurrency mining.
- The article emphasizes the significance of factors such as electricity rates, cost of living, broadband internet availability, and internet speed in determining the best states for mining.
-
Best States for Cryptocurrency Mining:
- North Dakota, Tennessee, and Oklahoma are identified as the best states for cryptocurrency mining.
- Factors considered include state income tax burden, electricity rates, cost of living, percentage of households with broadband internet, and average internet speed.
-
Methodology for Determining Best States:
- The article outlines the methodology used to determine the best states, incorporating factors such as state income tax burden, electricity rates, cost of living, broadband internet availability, and internet speed.
-
Composite Scores and Rankings:
- States are assigned composite scores based on the mentioned factors, with lower scores indicating better conditions for cryptocurrency mining.
- The article provides detailed findings and rankings for the top 15 states, considering their respective composite scores.
In conclusion, the article provides valuable insights into the dynamics of cryptocurrency mining, highlighting the importance of specific factors in determining the best states for this activity. The comprehensive analysis and rankings offer a practical guide for individuals interested in exploring cryptocurrency mining opportunities in the United States.
