Regulatory

Data Center State Regulatory Overview

BitOoda Regulatory Analysis, 10/18/23

Tom Nath

Key Takeaway #1

This report provides a high-level overview of the state regulatory landscape with respect to tax implications and mining-specific considerations for data center operators and developers.

Key Takeaway #2

Bitcoin miners looking to diversify their revenue streams by moving into the Compute space should be mindful of the incentive structures within each state in which they are considering building new data center infrastructure.

Key Takeaway #3

Two of the primary considerations are (1) the tax implications of data center development and (2) regulations that specifically apply to the mining industry.

Key Takeaway #4

This report is meant to be a helpful starting point for firms planning new data center development domestically.

This report provides a high-level overview of the state regulatory landscape with respect to tax implications and mining-specific considerations for data center operators and developers.

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The explosion of demand for AI – fueled by high performance compute power – has generated opportunities in a number of different sectors of the financial markets. One such opportunity is for bitcoin miners to diversify their revenue streams by moving into the Compute space by expanding their operational capacity as data centers.

As miners assess and pursue these opportunities, they should be mindful of the incentive structures within each state in which they are considering building new data center infrastructure.

Two of the primary considerations are (1) the tax implications of data center development and (2) regulations that specifically apply to the mining industry. States may incentivize new data center development through tax abatements tied to the size of the capital investment and number of new jobs created. In addition, some states have passed legislation that (directly or indirectly) places additional obligations on mining data center operators tied to energy sources and uses.

This report is meant to be a helpful starting point for firms planning new data center development domestically. The report lays out some of the tax and mining-specific incentive structures for new data center development within the most-frequently pursued domestic jurisdictions. It offers a high-level snapshot specifically of state laws; companies should also plan for the need to navigatefederal, state, and local regulations with their respective legal teams.

We will continue to monitor and share insights on the advancement of federal and state regulatory initiatives, such as pending federal legislation and evolving ESG considerations and requirements.

BitOoda can help data centers and miners pursue these types of opportunities leveraging our deep expertise and relationships across the TradFi and digital asset landscapes.

‍

Disclosures

Purpose

This research is only for the clients of BitOoda. This research is not intended to constitute an offer, solicitation, or invitation for any securities and may not be distributed into jurisdictions where it is unlawful to do so. For additional disclosures and information, please contact a BitOoda representative at info@bitooda.io.

Analyst Certification

Tom Nath, the research analyst denoted by an “AC” on the cover of this report, hereby certifies that all of the views expressed in this report accurately reflect his personal views, which have not been influenced by considerations of the firm’s business or client relationships.

Conflicts of Interest

This research contains the views, opinions, and recommendations of BitOoda. This report is intended for research and educational purposes only. We are not compensated in any way based upon any specific view or recommendation.

General Disclosures

Any information (“Information”) provided by BitOoda Holdings, Inc., BitOoda Digital, LLC, BitOoda Technologies, LLC or Ooda Commodities, LLC and its affiliated or related companies (collectively, “BitOoda”), either in this publication or document, in any other communication, or on or throughhttp://www.bitooda.io/, including any information regarding proposed transactions or trading strategies, is for informational purposes only and is provided without charge. BitOoda is not and does not act as a fiduciary or adviser, or in any similar capacity, in providing the Information, and the Information may not be relied upon as investment, financial, legal, tax, regulatory, or any other type of advice. The Information is being distributed as part of BitOoda’s sales and marketing efforts as an introducing broker and is incidental to its business as such.BitOoda seeks to earn execution fees when its clients execute transactions using its brokerage services. BitOoda makes no representations or warranties (express or implied) regarding, nor shall it have any responsibility or liability for the accuracy, adequacy, timeliness or completeness of, the Information, and no representation is made or is to be implied that the Information will remain unchanged. BitOoda undertakes no duty to amend, correct, update, or otherwise supplement the Information.

The Information has not been prepared or tailored to address, and may not be suitable or appropriate for the particular financial needs, circumstances or requirements of any person, and it should not be the basis for making any investment or transaction decision. The Information is not a recommendation to engage in any transaction. The digital asset industry is subject to a range of inherent risks, including but not limited to: price volatility, limited liquidity, limited and incomplete information regarding certain instruments, products, or digital assets, and a still emerging and evolving regulatory environment. The past performance of any instruments, products or digital assets addressed in the Information is not a guide to future performance, nor is it a reliable indicator of future results or performance.

All derivatives brokerage is conducted byOoda Commodities, LLC a member of NFA and subject to NFA’s regulatory oversight and examinations. However, you should be aware that NFA does not have regulatory oversight authority over underlying or spot virtual currency products or transactions or virtual currency exchanges, custodians or markets.

BitOoda Technologies, LLC is a member of FINRA.

“BitOoda”, “BitOoda Difficulty”, “BitOoda Hash”, “BitOoda Compute”, and the BitOoda logo are trademarks of BitOoda Holdings, Inc.

‍

The explosion of demand for AI – fueled by high performance compute power – has generated opportunities in a number of different sectors of the financial markets. One such opportunity is for bitcoin miners to diversify their revenue streams by moving into the Compute space by expanding their operational capacity as data centers.

As miners assess and pursue these opportunities, they should be mindful of the incentive structures within each state in which they are considering building new data center infrastructure.

Two of the primary considerations are (1) the tax implications of data center development and (2) regulations that specifically apply to the mining industry. States may incentivize new data center development through tax abatements tied to the size of the capital investment and number of new jobs created. In addition, some states have passed legislation that (directly or indirectly) places additional obligations on mining data center operators tied to energy sources and uses.

This report is meant to be a helpful starting point for firms planning new data center development domestically. The report lays out some of the tax and mining-specific incentive structures for new data center development within the most-frequently pursued domestic jurisdictions. It offers a high-level snapshot specifically of state laws; companies should also plan for the need to navigatefederal, state, and local regulations with their respective legal teams.

We will continue to monitor and share insights on the advancement of federal and state regulatory initiatives, such as pending federal legislation and evolving ESG considerations and requirements.

BitOoda can help data centers and miners pursue these types of opportunities leveraging our deep expertise and relationships across the TradFi and digital asset landscapes.

‍

Disclosures

Purpose

This research is only for the clients of BitOoda. This research is not intended to constitute an offer, solicitation, or invitation for any securities and may not be distributed into jurisdictions where it is unlawful to do so. For additional disclosures and information, please contact a BitOoda representative at info@bitooda.io.

Analyst Certification

Tom Nath, the research analyst denoted by an “AC” on the cover of this report, hereby certifies that all of the views expressed in this report accurately reflect his personal views, which have not been influenced by considerations of the firm’s business or client relationships.

Conflicts of Interest

This research contains the views, opinions, and recommendations of BitOoda. This report is intended for research and educational purposes only. We are not compensated in any way based upon any specific view or recommendation.

General Disclosures

Any information (“Information”) provided by BitOoda Holdings, Inc., BitOoda Digital, LLC, BitOoda Technologies, LLC or Ooda Commodities, LLC and its affiliated or related companies (collectively, “BitOoda”), either in this publication or document, in any other communication, or on or throughhttp://www.bitooda.io/, including any information regarding proposed transactions or trading strategies, is for informational purposes only and is provided without charge. BitOoda is not and does not act as a fiduciary or adviser, or in any similar capacity, in providing the Information, and the Information may not be relied upon as investment, financial, legal, tax, regulatory, or any other type of advice. The Information is being distributed as part of BitOoda’s sales and marketing efforts as an introducing broker and is incidental to its business as such.BitOoda seeks to earn execution fees when its clients execute transactions using its brokerage services. BitOoda makes no representations or warranties (express or implied) regarding, nor shall it have any responsibility or liability for the accuracy, adequacy, timeliness or completeness of, the Information, and no representation is made or is to be implied that the Information will remain unchanged. BitOoda undertakes no duty to amend, correct, update, or otherwise supplement the Information.

The Information has not been prepared or tailored to address, and may not be suitable or appropriate for the particular financial needs, circumstances or requirements of any person, and it should not be the basis for making any investment or transaction decision. The Information is not a recommendation to engage in any transaction. The digital asset industry is subject to a range of inherent risks, including but not limited to: price volatility, limited liquidity, limited and incomplete information regarding certain instruments, products, or digital assets, and a still emerging and evolving regulatory environment. The past performance of any instruments, products or digital assets addressed in the Information is not a guide to future performance, nor is it a reliable indicator of future results or performance.

All derivatives brokerage is conducted byOoda Commodities, LLC a member of NFA and subject to NFA’s regulatory oversight and examinations. However, you should be aware that NFA does not have regulatory oversight authority over underlying or spot virtual currency products or transactions or virtual currency exchanges, custodians or markets.

BitOoda Technologies, LLC is a member of FINRA.

“BitOoda”, “BitOoda Difficulty”, “BitOoda Hash”, “BitOoda Compute”, and the BitOoda logo are trademarks of BitOoda Holdings, Inc.

‍

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Data Center State Regulatory Overview

BitOoda Regulatory Analysis, 10/18/23

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