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The Nebraska Revenue Committee recently convened to review LB526, a bill aimed at regulating cryptocurrency mining’s impact on the state’s electrical grid. Introduced by Sen. Mike Jacobson at Governor Jim Pillen’s request, the legislation seeks to impose a 2.5-cent excise tax per kilowatt-hour on energy consumption by cryptocurrency mining operations exceeding 1,000 kilowatt-hours annually.
Key Adjustments and Amendments
During the February 12 hearing, Sen. Jacobson proposed an amendment to reduce the tax to 1 cent per kilowatt-hour, along with additional modifications. If passed, public power districts would gain authority to impose operational conditions, requiring mining facilities to provide direct payments or letters of credit for infrastructure upgrades needed to support their energy demands.
Impact on Nebraska’s Power Grid and Economy
Sen. Jacobson emphasized that cryptocurrency mining places a significant strain on Nebraska’s electrical infrastructure, often necessitating expensive investments in substations and transmission lines. He noted that the economic return on energy use from cryptocurrency mining is relatively low compared to agriculture and manufacturing, which generate higher employment and economic activity.
According to the Nebraska Department of Revenue, LB526 could generate approximately $9 million for the state’s general fund in FY2025-26, increasing to $14.4 million by FY2027-28.
Kenny Zoeller, Director of the Governor’s Policy Research Office, supported the bill, stating that Nebraska’s electricity demand often exceeds its transmission capacity, limiting growth opportunities for other industries. He also pointed out that many cryptocurrency mining firms benefit from state tax incentives while contributing minimal job creation.
Industry Opposition and Business Concerns
However, not everyone agrees with LB526. Matthew Carson, representing AAIM Data Centers in Aurora, argued that the tax could force his company to relocate. His facility employs four full-time workers and has invested over $3 million in infrastructure improvements.
“I only ask for fairness as a business within the state. LB526 unfairly targets my operations based on business model alone,” Carson stated.
Similarly, Jim Crawford, a Bitcoin mining operator in Kearney, warned that the bill could deter future investments in Nebraska. He emphasized that mining operations can help balance the electrical grid during peak demand times and should be recognized for their contribution rather than penalized.
Challenges in Implementation
Beyond business opposition, Shelley Sahling-Zart of Lincoln Electric System raised concerns about practical enforcement, highlighting difficulties in identifying cryptocurrency mining customers for tax collection. Meanwhile, Ron Tillery, representing the Nebraska Economic Developers Association and Nebraska Chamber of Commerce and Industry, opposed the bill, urging policymakers to support growth in tech sectors, including data centers and cryptocurrency mining.
What’s Next for LB526?
As of now, the Revenue Committee has not made a final decision on LB526. The debate over cryptocurrency mining taxation in Nebraska continues, with stakeholders on both sides closely monitoring the bill’s progress.
You might also want to know about Everything You Need to Know About Crypto Taxes (2025-2026)
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