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.
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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).
