1. (a) Qualification. Beginning on November 1, 2024 and ending on December 31, 2029, sales of machinery and equipment, including but not limited to, servers and computers, racks, power distribution units, cabling, switchgear, transformers, substations, software, and network equipment, and electricity for use by a qualified entity engaged in commercial mining of digital assets purposes in a colocation facility that has entered into a “load reduction agreement” are exempt from sales tax.
2. (b) Definitions. The following words and terms, when used in this Section, shall have the following meaning, unless the context clearly indicates otherwise:
3. (1) "Blockchain technology" means shared or distributed data structures or digital ledgers governed by consensus protocols and maintained by peer-to-peer networks that store digital transactions; and verify and secure transactions cryptographically. [68 O.S. § 1359]
4. (2) "Colocation facility" means a facility or facilities located in this state that are utilized in the commercial mining of digital assets or in hosting persons engaged in the commercial mining of digital assets through utilization of the facility’s infrastructure, 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. [68 O.S. § 1359]
5. (3) "Commercial mining of digital assets" means the process through with blockchain technology is used to mine digital assets at a colocation facility. [68 O.S. § 1359]
6. (4) "Digital Assets" means a type of virtual currency that utilizes blockchain technology and that can be digitally traded between users, or can be converted or exchanged for legal tender. [68 O.S. § 1359]
7. (5) "Load reduction agreement" means 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 conditions. [68 O.S. § 1359]
8. (6) "Mine" or "Mining" means the process through which blockchain transactions are verified and accepted by adding the transactions to a blockchain ledger, which involves solving complex and mathematical cryptographic problems associated with a block containing transaction data. [68 O.S. § 1359]
9. (c) Limitations. The exemption is limited to eligible, properly documented transactions. Only sales of tangible personal property and services purchased by the organization, invoiced to the organization, and paid for by funds or check directly from the organization will qualify for the exemption described in this Section.
10. (d) Purchases by contractors. Purchases of tangible personal property or services by a contractor, as defined by 68 O.S. § 1352, are taxable to the contractor. A contractor may not purchase tangible personal property or services to perform contracts with organizations engaged in commercial mining of digital assets exempt from sales tax.
11. (e) Application process. Application for an exemption permit is made by submitting for each location a Form 13-16-A to the Business Tax Services Division, Oklahoma Tax Commission, Oklahoma City, OK 73194. Form 13-16-A is contained in Packet E, available online at www.tax.ok.gov, and must be submitted with all information and supporting documentation for each location application:
12. (1) The name, address, and federal employer's identification number of the applicant company and the name and title of the person authorized to sign for the applicant;
13. (2) A complete description of the commercial mining of digital assets that will take place within the establishment;
14. (3) Physical address of the location of the colocation facility;
15. (4) Copy of an executed load reduction agreement(s) specific to the location of the colocation facility referenced in the application;
16. (5) The signature of a person authorized to bind the applicant, signed under penalty of perjury before a notary; and
17. (6) Such additional information as the Commission may require to confirm eligibility.
18. (f) Review and determination. Upon receipt of the application, the Business Tax Services Division of the Tax Commission will review and make a determination as to the applicant's eligibility for an exemption permit. Upon approval, an exemption permit will be issued to the applicant.
19. (g) Denial of permit; cancellation, suspension, or revocation of permit. The exemption permit may be denied, cancelled, suspended, or revoked by the Commission for non-compliance with the provisions of this Section, with applicable Oklahoma tax statutes, or for other good cause shown. Proceedings related to the cancellation or refusal to issue a permit pursuant to this Section shall be governed by 710:1-5-100 and 710:1-5-21 through 710:1-5-49 of the permanent rules of the Commission.
20. (h) Burden of proof. The burden of establishing the right to retain the exemption permit is on the applicant.

Added at 42 Ok Reg, Number 20, effective 7-15-25