Biden Administration Proposes Digital Asset Mining Energy Tax

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Mon, 25 Sep 2023, 05:19 PM
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Biden Administration Proposes Digital Asset Mining Energy Tax

The proposed 30% tax on cryptocurrency miners aims to offset the negative environmental and social consequences of mining, but has faced criticism from industry experts who argue it would suppress the U.S. Bitcoin mining industry.

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Wed, 03 May 2023, 04:01 am UTC

The Biden administration has proposed a tax on crypto miners to address climate change. According to Yahoo News, the Council of Economic Advisers (CEA) is advocating for a Digital Asset Mining Energy (DAME) tax, which would impose a 30% tax on cryptocurrency miners to offset the harmful environmental and social consequences of crypto mining.

The CEA claimed that cryptocurrency miners harm society by contributing to increased local pollution and greenhouse gas emissions while increasing energy costs while operating with impunity. The proposed tax aims to redress these negative effects.

Following the controversial announcement, CEO of the Satoshi Action Fund, Dennis Porter, criticized the proposed tax, calling it an unfair and discriminatory action that would suppress the U.S. Bitcoin mining industry.

He also claimed that if enacted, mining companies would respond by leaving American shores, triggering an outflow of innovation and capital to friendlier jurisdictions.

Moreover, WhaleWire took a more extreme position, saying the DAME tax would "completely destroy Bitcoin," leading to the network collapsing. He also argued that this scenario would see positive price effects.

The proposal comes as proof-of-work mining has become a political issue, with advocates pushing back against efforts to stifle mining activities within the U.S. The Texas Blockchain Council recently launched its "Don't Mess With Texas Innovation" campaign to block a bill designed to end incentives for Bitcoin miners in the state.

In a recent Senate committee hearing, Senator Cynthia Lummis argued that environmental standards, as set out by the Crypto-Asset Environmental Transparency Act, should not be used to constrain miners.

The U.S. became the biggest mining country after China's Bitcoin mining ban in May 2021, accounting for approximately 35% of the total hash rate by January 2022. Bitcoin hash rate continued to climb, reaching a new all-time high of 440.7M TH/s on May 1, suggesting mining confidence.

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