Monday, July 22, 2024

White House advisors renew push for 30% digital mining energy tax

The Biden administration has renewed its push for a 30% Digital Asset Mining Energy (DAME) tax on cryptocurrency miners, part of efforts to minimize the industry’s alleged impact on climate change. 

The proposed crypto-mining tax was first announced on March 9 as part of President Biden’s FY2024 budget and seeks to impose a phased-in 30% excise tax on electricity used by crypto-miners.

“An excise tax on electricity usage by digital asset miners could reduce mining activity along with its associated environmental impacts and other harms,” the Department of Treasury wrote at the time. Bitcoin (BTC) fell under $20,000 just a day later.

However, a May 2 statement from the White House’s Council of Economic Advisers (CEA) has brought the proposal back to light again, in attempts to justify the need for the new tax.

“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 CEA wrote.

“The DAME tax encourages firms to start taking better account of the harms they impose on society,” it wrote, adding:

“While crypto assets are virtual, the energy consumption tied to their computationally intensive production is very real and imposes very real costs.”

The blog also referenced reports suggesting crypto mining has “negative spillovers” on the environment, quality of life, and electricity grids and that pollution from electricity generation falls on low-income neighborhoods and communities of color, while pushing up the cost of electricity for consumers.

Related: Biden budget proposes 30% tax on crypto mining electricity usage

It even suggests that crypto mining using existing clean power (such as hydropower) can still have a negative impact on the environment, by pushing other electricity users to “dirtier” sources of electricity.

Screenshot of CEA’s thread on the environmental impact of crypto mining. Source: Twitter

The Twitter thread posted by the Council of Economic Advisers has attracted widespread criticism from the community, with some calling it “misinformation” and “propaganda” while one Twitter user argued such a tax would “simply push Bitcoin mining to Russia & other countries.”

Magazine: Best and worst countries for crypto taxes — Plus crypto tax tips

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