Biden Administration Seeks to Impose 30% Tax on Crypto Mining
The White House Council of Economic Activities (CEA) is looking to penalize the crypto mining sector stating that the high energy consumption by crypto miners have spillover effects on the environment and quality of life.
In a major move, the Biden administration is looking to impose a major tax on the crypto mining activities taking place in the United States. On Tuesday, May 2nd, the White House Council of Economic Activities (CEA) argued over the harms that crypto mining operations pose to society.
After the ban by China on crypto mining activities in 2021, the US witnessed a strong influx of crypto miners settling into crypto-friendly jurisdictions such as Texas and others. Now, the US is one of the top destinations contributing a large share of the global crypto mining activity.
The CEA made the case for a US tax equal to 30% of the energy costs incurred by a mining firm. This comes as an unusual industry-specific penalty that could threaten the profits of such businesses. The CEA lays out the case for the Digital Asset Mining Energy (DAME) excise tax. In the blog post appearing on the White House website on Tuesday, the CEA wrote:
“Cryptominers’ high-energy consumption has negative spillovers on the environment, quality of life, and electricity grids where these firms locate across the country. Currently, cryptomining firms do not have to pay for the full cost they impose on others, in the form of local environmental pollution, higher energy prices, and the impacts of increased greenhouse gas emissions on the climate. The DAME tax encourages firms to start taking better account of the harms they impose on society.”
Earlier this year in March 2023, the Biden administration had proposed the excise tax published by the US Treasury Department. This “Greenbook” lays out the administration’s proposal and priorities for generating revenue over the next year. As per estimates, this proposal could raise billions of dollars in revenue over the next decade.
Crypto Industry Players Revolt against the Measures
Critics of the proposed tax noted that the crypto-mining industry is been unfairly targeted. Speaking to Yahoo News, Tom Mapes, director of energy policy at the Chamber of Digital Commerce, said:
“This puts a clear line in the sand that they do not like the industry. They are looking for ways to hamstring it. This is just a way to go after the industry which they do not support.”
On the other hand, Congressional Republicans have resisted the efforts of the administration and regulators to penalize the crypto sector. There is a higher likelihood that the Republican-controlled House may not embrace taxes that would punish the industry.
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Bhushan is a FinTech enthusiast and holds a good flair in understanding financial markets. His interest in economics and finance draw his attention towards the new emerging Blockchain Technology and Cryptocurrency markets. He is continuously in a learning process and keeps himself motivated by sharing his acquired knowledge. In free time he reads thriller fictions novels and sometimes explore his culinary skills.
