Tennessee Digital Asset Mining Rights Act

The bill’s mining provisions were designed to distinguish ordinary residential activity from larger industrial operations. The proposed text defined “digital asset mining” as using electricity to power a computer for securing a blockchain network and generating a digital asset. It defined a “digital asset mining business” as a group of computers at a single site consuming more than one megawatt of energy on an average annual basis to secure a blockchain protocol and generate a digital asset.

For individuals, the proposal would have allowed home digital asset mining in residentially zoned areas if the person complied with local noise ordinances. It also would have allowed individuals to operate blockchain nodes, transfer digital assets on a blockchain protocol, exchange one digital asset for another through a protocol, and participate in staking.

The proposed act would have stated that a digital asset mining business may mine in any area zoned for industrial use. Political subdivisions would have been restricted from creating mining-specific sound limits unless those limits matched generally applicable sound-pollution limits for comparable residential or industrial areas. The bill also would have barred local governments from imposing requirements on a digital asset mining business that were not also imposed on data centers in the same jurisdiction.

For zoning changes affecting an area with a digital asset mining business, the proposal required ordinary notice and hearing procedures. It also would have allowed a mining business to appeal a zoning change to a court, with rejection required if the change was made to discriminate against the mining business. These provisions were framed as anti-discrimination rules, not as a general exemption from local land-use, building, environmental, or utility requirements.

HB2309/SB2370 also included non-mining digital asset provisions. State and local governments would not have been able to prohibit, restrict, or impair an individual’s ability to use a digital asset to purchase legal goods or services, or to use a self-hosted wallet or hardware storage wallet for self-custody. The bill would have blocked taxes or charges based solely on the use of a digital asset as the payment method, while preserving taxes or charges that would otherwise apply to the same transaction using legal tender.

The proposal stated that an individual engaged in home mining, a digital asset mining business, or a node operator would not need a license under Tennessee’s Money Transmission Modernization Act for those activities. It also provided that a business offering digital asset mining services or staking-as-a-service would not be deemed to be offering a security under the Tennessee Securities Act of 1980.

The bill separately would have amended Tennessee banking law to allow a financial institution or trust company to provide digital asset custody services if it maintained adequate protocols to manage risk and comply with applicable law. The text contemplated use of third-party service providers and required risk management systems, insurance review, and service-provider oversight. It also described nonfiduciary custody, where legal title remains with the customer, and fiduciary custody, where the institution or trust company has fiduciary powers.

HB2309 was filed on January 29, 2024, with SB2370 as the Senate companion. The House version was referred to the Commerce Committee, advanced from the Business & Utilities Subcommittee with amendment language, and was then taken off notice in the Commerce Committee on March 19, 2024. The 113th Tennessee General Assembly adjourned sine die on April 25, 2024, and NCSL later listed HB2309 and SB2370 as “Failed – Adjourned.” Because the proposal did not become law, the July 1, 2024 effective date in the bill text is not operative.