SEC Clarifies: Proof-of-Work Crypto Mining Not Subject to Securities Laws

On March 20, 2025, the U.S. Securities and Exchange Commission (SEC) released a staff statement clarifying that proof-of-work (PoW) cryptocurrency mining activities do not fall under federal securities laws. This determination means that individuals and entities engaged in PoW mining are not required to register their operations with the SEC.

The SEC’s Division of Corporation Finance analyzed PoW mining under the Howey Test, a legal standard used to assess whether a transaction qualifies as an investment contract and, thus, a security. The analysis concluded that PoW mining does not involve an investment of money in a common enterprise with the expectation of profits derived from the efforts of others. Instead, miners utilize their computational resources to secure blockchain networks and receive rewards directly from the network’s protocol.

This clarification extends to both solo miners and participants in mining pools. In solo mining, individuals use their own hardware to validate transactions and earn rewards. In mining pools, multiple miners combine their computational power to increase the likelihood of successfully mining a block, subsequently sharing the rewards. The SEC noted that, in both scenarios, the miners’ profits are not dependent on the managerial efforts of others but on their own contributions to the network.

The SEC’s statement provides much-needed regulatory clarity for the cryptocurrency mining industry, particularly for those involved in PoW mining of cryptocurrencies like Bitcoin. By confirming that these activities do not trigger securities laws, the SEC has removed a potential regulatory hurdle, allowing miners to operate without the need for securities registration. This move is expected to encourage further growth and investment in the U.S. crypto mining sector.