The U.S. Securities and Exchange Commission (SEC) issued new guidance clarifying that Proof-of-Work (PoW) mining activities do not constitute securities transactions under federal law. Released on March 20, 2025, the statement designates PoW mining as “protocol mining,” emphasizing its technical role in maintaining blockchain networks rather than functioning as investment contracts. The decision provides regulatory relief to Bitcoin, Litecoin, and other PoW-based crypto miners operating in the United States.
Under the guidance, the SEC recognized PoW mining as a permissionless process where participants validate transactions and secure networks through computational effort. Miners receive “Covered Crypto Assets” as rewards, but these tokens do not qualify as securities because mining activities lack dependence on third-party managerial efforts—a key criterion of the Howey Test. The commission explicitly distinguished solo mining and mining pools from securities offerings, noting that pool operators perform administrative tasks rather than entrepreneurial functions.
The SEC’s analysis focused on the decentralized nature of PoW blockchains, where miners contribute infrastructure without centralized control. Mining pools, which combine computational resources to improve reward chances, were deemed non-securities despite their coordinated operations. Earnings derive from proportional hardware contributions rather than profit-sharing agreements or pooled investment structures.
Industry experts welcomed the clarity, noting it reduces legal uncertainties for mining businesses facing environmental scrutiny and energy consumption debates. The guidance confirms miners are exempt from registration requirements under the Securities Act of 1933, allowing operations to continue without securities-related compliance burdens. However, the SEC cautioned that other crypto-related activities involving profit guarantees or tokenized revenue streams might still fall under securities regulations.
Sources:
https://crypto.news/sec-issues-guidance-on-proof-of-work-mining-and-securities-regulations/
https://www.ainvest.com/news/sec-clarifies-bitcoin-mining-securities-violation-2503/
https://www.cryptoninjas.net/news/sec-issues-guidance-on-proof-of-work-mining-and-securities-regulation/
