Proposed Tax on Bitcoin Miners' Operations Stalls as Agreement on U.S. Debt Obligations Reached
Wed, 31 May 2023, 04:23 am UTC
Bitcoin miners have been granted a reprieve as an initiative to impose hefty taxes on their operations, tabled by the White House, seems to be stalling. This follows a substantial agreement between President Biden and leading Republicans to avert a U.S. default on its debt obligations.
Initially proposed in May by the White House, the scheme known as the Digital Assets Mining Energy Excise Act (or DAME Act) suggested levying a 10% tax on electricity consumed by Bitcoin and other cryptocurrency miners starting in 2024. The rate was set to escalate to 30% by 2026.
As of now, no further update on this proposed tax has been provided by the White House. However, Warren Davidson, a Republican Representative from Ohio, announced on Sunday that the mining tax will not be implemented.
When reached for comment regarding the current standing of the DAME Act, the Treasury Department remained silent. However, based on indications from another high-ranking Republican, the legislation seems to be at a standstill. This Republican suggested that the agreement on the debt ceiling "overrules any calls from Democrats for new taxes and negates all $5 trillion of Biden's proposed tax hikes."
In the original pitch, the White House indicated that the DAME Act could have generated revenue of $3.5 billion over a decade.
Cryptocurrency mining has attracted criticism from environmentalists and Democratic lawmakers over recent years. They argue that it consumes excessive energy while offering limited benefits—occasionally leading to increased electricity costs for residents in regions hosting mining operations. In response, cryptocurrency proponents argue that environmental criticisms of Bitcoin mining are exaggerated and that many misunderstand the industry, which relies heavily on renewable energy sources within the U.S.
Although Bitcoin's operation does demand significant energy, newer blockchain technologies require comparatively less as they employ an alternate mechanism called proof of stake. Ethereum, the second-largest cryptocurrency, embraced the proof of stake model last autumn.
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