Lynn Johannson, Advisor, Sustainability and ESG
January 4th, 2024
Lynn Johannson, President of E2 Management Corporation and Catalyst for THE Collaboration
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SEC Confirms Crypto PoW Mining is Not a Security
Regulation | March 21, 2025
Image: Freepik
SEC says Proof-of-Work mining doesn’t fall under U.S. securities laws
On March 20 2025, the U.S. Securities and Exchange Commission's (SEC), Corporate Finance Division, issued a statement making it clear that mining crypto on proof-of-work (PoW) networks like Bitcoin isn’t considered a securities transaction. That includes both solo miners (operators) or if someone is part of a mining pool (pooled miners) operating in the U.S. do not need to register with the SEC.
Howey Test Doesn’t Apply Here
This update from the SEC gives the crypto mining community more clarity about where they stand legally in the U.S. as solo or pooled PoW miners. The message is if you’re earning tokens by providing computational effort to secure a PoW network, that doesn't count as investing in a security.
See: Fidelity Report Insights on Digital Assets in 2025
The reasoning is that the infamous Howey Test (used to help determine whether or not an activity is considered a security), is only a security if profits are expected mainly from another party's managerial or entrepreneurial work. In the case of PoW mining, the reward is derived from the miner's own work/effort and hardware, so the activity is not akin to an investment security.
The same statement applies to mining pools where many miners group together and share computing power to improve their chances of solving cryptographic puzzles to earn block rewards. Even when rewards are split and managed by a pool operator, the SEC said the core activity remains technical and administrative, and as such is not an investment contract.
Pushback from Within the SEC, but Industry Welcomes Clarity
Not everyone at the SEC agrees though. Commissioner Caroline Crenshaw issued a dissenting opinion on the same day, saying the analysis was too broad and should be handled on a case by case basis. She warned that some mining setups could involve passive income arrangements that might still fall under securities rules.
See: Marathon Bitcoin Miner Ventures into Whisky Barrels
Still, most reactions online have welcomed the added legal clarity and Bitcoin advocates see this as a win for decentralization. Some have noted that this may influence policy beyond the U.S. and could help shape mining rules in other jurisdictions, such as Canada.
Outlook
While the statement doesn't alter the environmental debates around PoW, it potentially lowers compliance risks and may encourage investment in mining infrastructure. At the end of the day, 'Crypto miners can keep on digging'.
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