An Act
ENROLLED HOUSE
BILL NO. 1600 By: Kannady of the House
and
Coleman of the Senate
An Act relating to digital asset mining; amending 68
O.S. 2021, Section 1359, which relates to
manufacturing tax exemptions; creating an exemption
for certain purchases related to the mining of
digital assets; providing definitions; and providing
an effective date.
SUBJECT: Digital asset mining
BE IT ENACTED BY THE PEOPLE OF THE STATE OF OKLAHOMA:
SECTION 1. AMENDATORY 68 O.S. 2021, Sec tion 1359, is
amended to read as follows:
Section 1359. There are hereby specifically exempted from the
tax levied by Section 1350 et seq. of this title:
1. Sales of goods, wares, merchandise, tangible personal
property, machinery and equipment to a ma nufacturer for use in a
manufacturing operation. Goods, ware s, merchandise, property,
machinery and equipment used in a nonmanufacturing activity or
process as set forth in paragraph 14 of Section 1352 of this title
shall not be eligible for the exemption provided for in this
subsection by virtue of the activity or process being performed in
conjunction with or integrated into a manufacturing operation.
For the purposes of this paragraph, sales made to any person,
firm or entity that has entered into a co ntractual relationship for
the construction and improvement of manufacturing goods, wares,
merchandise, property, machinery and equipment for use in a ENR. H. B. NO. 1600 Page 2
manufacturing operation shall be considered sales made to a
manufacturer which is defined or classified i n the North American
Industry Classification System (NAICS) Ma nual under Industry Group
No. 324110. Such purchase shall be evidenced by a copy of the sales
ticket or invoice to be retained by the vendor indicating that the
purchases are made for and on be half of such manufacturer and set
out the name of such manufac turer as well as include a copy of the
Manufacturing Exemption Permit of the manufacturer. Any person who
wrongfully or erroneously certifies that purchases are being ma de on
behalf of such manufacturer or who otherwise violates this paragraph
shall be guilty of a misdemeanor and upon conviction thereof shall
be fined an amount equal to double the amount of sales tax involved
or incarcerated for not more than sixty (60) d ays or both;
2. Ethyl alcohol when sold and used for the purpose of blending
same with motor fuel on which motor fuel tax is levied by Section
500.4 of this title;
3. Sales of containers when sold to a person regularly engaged
in the business of resellin g empty or filled cont ainers or when
purchased for the purpose of packaging raw produc ts of farm, garden,
or orchard for resale to the consumer or processor. This exemption
shall not apply to the sale of any containers used more than once
and which are ordinarily known as retu rnable containers, except
returnable soft drink bottles and the cartons, crates, pallets, and
containers used to transport returnable soft drink bottles. Each
and every transfer of title or possession of such returnable
containers in this state to any per son who is not regularly engaged
in the business of selling, res elling or otherwise transferring
empty or filled containers shall be taxable under this Code.
Additionally, this exemption shall not apply to the sale of labels
or other materials delivered a long with items sold but which are not
necessary or absolutely e ssential to the sale of the sold
merchandise;
4. Sales of or transfers of title to or possession of any
containers, after June 30, 1987, used or to be used more than onc e
and which are ordinarily known as returnable containers and which do
or will contain beverages defined by paragraphs 4 and 14 of Section
506 of Title 37 of the Oklahoma Statutes, or water for human
consumption and the cartons, crates, pallets, and contai ners used to
transport such returnable containers;
5. Sale of tangible personal prope rty when sold by the
manufacturer to a person who transports it to a state other than ENR. H. B. NO. 1600 Page 3
Oklahoma for immediate and exclusive use in a state other than
Oklahoma. Provided, no sales at a retail outlet shall qualify for
the exemption under this paragraph;
6. Machinery, equipment, fuels and chemicals or other materials
incorporated into and directly used or consumed in the process of
treatment to substantially reduce the volum e or harmful properties
of hazardous waste at treatment facilities specifically permit ted
pursuant to the Oklahoma Hazardous Waste Management Act and operated
at the place of waste generation, or facilities approved by the
Department of Environmental Quali ty for the cleanup of a site of
contamination. The term "hazardous" waste may include low-level
radioactive waste for the purpose of this paragraph;
7. Except as otherwise provided by subsection I of Section 3658
of this title pursuant to which the exemp tion authorized by this
paragraph may not be claimed, sales of tangible personal prope rty to
a qualified manufacturer or distributor to be consumed or
incorporated in a new manufacturing or distribution facility or to
expand an existing manufacturing or di stribution facility. For
purposes of this paragraph, sales made to a contractor or
subcontractor that has previously entered into a contractual
relationship with a qualified manufacturer or distributor for
construction or expansion of a manufacturing or d istribution
facility shall be considered sales made to a qualified manufacturer
or distributor. For the purposes of this paragraph, "qualified
manufacturer or distributor" means:
a. any manufacturing enterprise whose total cost of
construction of a new or expanded facility exceeds the
sum of Five Million Dollars ($5,000,000.00) and in
which at least one hundred (100) new full -time-
equivalent employees, as certified by the Oklahoma
Employment Security Commission, are added and
maintained for a period of at least thirty-six (36)
months as a direct result of the new or expanded
facility,
b. any manufacturing enterprise whose total cost of
construction of a new or expanded facility exceeds the
sum of Ten Million Dollars ($10,000,000.00) and the
combined cost of construction material, machinery,
equipment and other tangible personal property exem pt
from sales tax under the provisions of this paragraph
exceeds the sum of Fifty Million Dollars ENR. H. B. NO. 1600 Page 4
($50,000,000.00) and in which at least seventy -five
(75) new full-time-equivalent employees, as certified
by the Oklahoma Employment Security Commission, are
added and maintained for a period of at least thirty -
six (36) months as a direct result of the new or
expanded facility,
c. any manufacturing enterprise whose total cost of
construction of an expanded facility exceeds the sum
of Three Hundred Million Dolla rs ($300,000,000.00) and
in which the manufacturer has and maintains an average
employment level of at least one thousand seven
hundred fifty (1,750) full -time-equivalent employees,
as certified by the Employment Security Commission, or
d. any enterprise primarily engaged in the general
wholesale distribution of groceries defined or
classified in the North American Industry
Classification System (NAICS) Manual under Indust ry
Groups No. 4244 and 4245 and which has at least
seventy-five percent (75%) of its t otal sales to in-
state customers or buyers and whose total cost of
construction of a new or expanded facility exceeds the
sum of Forty Million Dollars ($40,000,000.00) wi th
such construction commencing on or after July 1, 2005,
and before December 31, 2005 , and which at least fifty
new full-time-equivalent employees, as certified by
the Oklahoma Employment Security Commission, are added
and maintained for a period of at le ast thirty-six
(36) months as a direct result of the new or expanded
facility.
For purposes of this paragraph, the total cost of construction
shall include building and construction material and engineering and
architectural fees or charges directly associ ated with the
construction of a new or expanded facility. The total cost of
construction shall not include attorney fees. For purposes of
subparagraph c of this paragraph, the total cost of construction
shall also include the cost of qualified depreciabl e property as
defined in Section 2357.4 of this title and labor services performed
in the construction of an expanded facility. For the purpose of
subparagraph d of this paragraph, the total cost of construction
shall also include the cost of all parking, security and dock
structures or facilities necessary to manage, process or secure
vehicles used to receive and/or distribute groceries through such a ENR. H. B. NO. 1600 Page 5
facility. The employment requirement of this paragraph can be
satisfied by the employment of a portion o f the required number of
new full-time-equivalent employees at a manufacturing or
distribution facility that is related to or supported by the new or
expanded manufacturing or distribution facility as long as both
facilities are owned by one person or busi ness entity. For purposes
of this section, "manufacturing facility" shall mean buildi ng and
land improvements used in manufacturing as defined in Section 1352
of this title and shall also mean building and land improvements
used for the purpose of packing , repackaging, labeling or assembling
for distribution to market, products at least se venty percent (70%)
of which are made in Oklahoma by the same company but at an off -
site, in-state manufacturing or distribution facility or facilities.
It shall not include a retail outlet unless the retail outlet is
operated in conjunction with and on t he same site or premises as the
manufacturing facility. Up to ten percent (10%) of the square feet
of a manufacturing or distribution facility building may be devoted
to office space used to provide clerical support for the
manufacturing operation. Such ten percent (10%) may be in a
separate building as long as it is part of the same contiguous tract
of property on which the manufacturing or distribution facility is
located. Only sales of tangible personal property made after June
1, 1988, shall be eligi ble for the exemption provided by this
paragraph. The exemption authorized pursuant to subparagraph d of
this paragraph shall only become effective when the governing bo dy
of the municipality in which the enterprise is located approves a
resolution expressing the municipality's support for the
construction for such new or expanded facility. Upon approval by
the municipality, the municipality shall forward a copy of such
resolution to the Oklahoma Tax Commission;
8. Sales of tangible personal property pur chased and used by a
licensed radio or television station in broadcasting. This
exemption shall not apply unless such machinery and equipment is
used directly in the man ufacturing process, is necessary for the
proper production of a broadcast signal or is such that the failure
of the machinery or equipment to operate would cause broadcasting to
cease. This exemption begins with the equipment used in producing
live programming or the electronic equipment directly behind the
satellite receiving dish or ante nna, and ends with the transmission
of the broadcast signal from the broadcast antenna system. For
purposes of this paragraph, "proper production" shall include, but
not be limited to, machinery or equipment required by Federal
Communications Commission r ules and regulations;
ENR. H. B. NO. 1600 Page 6
9. Sales of tangible personal property purchased or used by a
licensed cable television operator in cablecasting. This exemption
shall not apply unless such machinery and equipment is used directly
in the manufacturing process, is n ecessary for the proper production
of a cablecast signal or is such that the failure of the machinery
or equipment to operate would cause cablecasting to cease. This
exemption begins with the equipment used in producing local
programming or the electronic equipment behind the satellite
receiving dish, microwave tower or antenna, and ends with the
transmission of the signal from the cablecast head -end system. For
purposes of this paragraph, "proper production" shall include, but
not be limited to, machiner y or equipment required by Federal
Communications Commission rules and regulations;
10. Sales of packaging materials for use in packing, shipping
or delivering tangible personal property for sale when sold to a
producer of agricultural products. This exe mption shall not apply
to the sale of any packaging material which is ordinarily known as a
returnable container;
11. Sales of any pattern used in the process of manufac turing
iron, steel or other metal castings. The exemption provided by this
paragraph shall be applicable irrespective of ownership of the
pattern provided that such pattern is used in the commercial
production of metal castings;
12. Deposits or other cha rges made and which are subsequently
refunded for returnable cartons, crates, pallets, and containers
used to transport cement and cement products;
13. Beginning January 1, 1998, machinery, electricity, fuels,
explosives and materials, excluding chemicals , used in the mining of
coal in this state;
14. Deposits, rent or other charges made for returnable
cartons, crates, pallets, and containers used to transport mushrooms
or mushroom products from a farm for resale to the consumer or
processor;
15. Sales of tangible personal propert y and services used or
consumed in all phases of the extrac tion and manufacturing of
crushed stone and sand, including but not limited to site
preparation, dredging, overburden removal, explosive placement and
detonation, onsite material hauling and/or tra nsfer, material ENR. H. B. NO. 1600 Page 7
washing, screening and/or crushing, product weighing and site
reclamation; and
16. Sale, use or consumption of paper stock and other raw
materials which are manufactured into commercial printed material in
this state primarily for use and delivery outside this state. For
the purposes of this sect ion, "commercial printed material" shall
include magazines, catalogs, retail inserts and direct mail ; and
17. Beginning on the effective date of this act and ending on
December 31, 2029, sales of machinery and equipment, including but
not limited to, serv ers and computers, racks, power distribution
units, cabling, switchgear, transformers, substations, software, and
network equipment, and electricity used for commercial m ining of
digital assets purposes in a colocation facility.
For purposes of this paragr aph:
a. "blockchain technology" means shared or distributed
data structures or digital ledgers governed by
consensus protocols and maintained by peer -to-peer
networks that:
(1) Store digital transa ctions, and
(2) Verify and secure transactions cryptographi cally,
b. "colocation facility" means a facility or facilities
located in this state and utilized in the commercial
mining of digital assets or in hosting persons engag ed
in the commercial mining o f digital assets through
utilization of the facility's infr astructure,
including servers and network hardware powered by
Internet bandwidth, electricity, and other services
generally required for such mining operations.
Provided, no facility shall qualify as a "colocation
facility" unless the facility has entered into a load
reduction agreement,
c. "commercial mining of digital assets" means the
process through which blockchain technology is used to
mine digital assets at a co location facility,
d. "digital assets" means a type of virtual currency that
utilizes blockchain technology and that: ENR. H. B. NO. 1600 Page 8
(1) can be digitally traded between users, or
(2) can be converted or exchanged for legal tender,
and
e. "load reduction agreement" me ans an agreement between
the customer and the local electric cooperative,
municipality, electric utility, or market operator
to temporarily reduce or curtail the customer's use of
electric power in order to respond to inclement
weather or other adverse con ditions,
f. "mine" or "mining" mea ns the process through which
blockchain transactions are ve rified and accepted by
adding the transactions to a blockchain ledger, which
involves solving complex and mathematical
cryptographic problems associated with a bl ock
containing transaction data .
SECTION 2. This act shall become effective N ovember 1, 2024.
ENR. H. B. NO. 1600 Page 9
Passed the House of Representatives the 28th day of May, 2024.
Presiding Officer of the House
of Representatives
Passed the Senate the 30th day of May, 2024.
Presiding Officer of the Senate
OFFICE OF THE GOVERNOR
Received by the Office of the Governor this ____________________
day of ___________________, 20_______, at _______ o'clock _______ M.
By: _________________________________
Approved by the Governor of the State of Oklahoma this _____ ____
day of ___________________, 20_______, at _______ o'clock _______ M.
_________________________________
Governor of the State of Oklahoma
OFFICE OF THE SECRETARY OF STATE
Received by the Office of the Secretary of S tate this __________
day of ___________________, 20_______, at _______ o'clock _______ M.
By: _________________________________