The Biden Administration Proposes A Hefty 30% Climate Change Tax on Crypto Mining Activities
In the latest development, the White House is trying to persuade the Congress in passing a 30% tax for the use of electricity in the crypto mining activities. The Biden administration is planning to introduce this in the next Federal budget in order to minimize the impact of crypto mining on climate change.
On Tuesday, May 2, the White House’s Council of Economic Advisers (CEA) argued that the crypto mining operations impose much harm to the society. If passed, this hefty 30% tax will massively eat into the profits of the crypto industry which was already struggling big time during the crypto winter of 2022.
Soon after China introduced an absolute ban on crypto mining back in 2021, several miners flocked to the US and set up base in crypto-friendly jurisdictions like Texas, and other regions. However, such measures from the Biden Administration could deter some of the biggest crypto miners from further expanding their business activities in the country.
The blog post published on the official White House website lays out the case for the Digital Asset Mining Energy (DAME) excise tax.
In the blog post, the president’s Council of Economic Advisers (CEA) argues “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.”
Popular crypto networks such as bitcoin and others employ the Proof-of-Work consensus mechanism which is an energy intensive approach that requires massive supercomputers that compete with each other to solve the mathematical puzzle and unlock news blocks within the system.
Earlier this year in March, the Biden administration had proposed excise tax in a document published by the U.S. Treasury Department. This proposal, however, has received strong criticism from crypto industry players who noted that this is just yet another way to go after the crypto players.
The Congressional Republicans have also resisted efforts from regulators with the Biden administration looking to penalize the crypto sector. As a result, the Republican-controlled House most likely won’t embrace taxes that punish the industry.