The government of the US and President Joe Biden has proposed a tax on cryptocurrency mining. The reason given for this tax implementation is the industry’s harmful environmental effects. President Biden presented his Fiscal Year 2024 Budget last month. The Digital Asset Mining Energy (DAME) excise tax is a new proposal in this year’s budget.
The proposed crypto-mining tax was first announced on March 9 as part of President Joe Biden’s FY2024 budget. According to a supplementary budget explanation document provided by the Department of the Treasury on March 9, any corporation employing resources, whether owned or rented, would be “subject to an excise tax equal to 30 per cent of the costs of electricity used in digital asset mining.”
According to the Council of Economic Advisers (CEA), cryptocurrency mining companies “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.”
It recommended that the tax be applied after December 31, phased in over three years at a 10% annual rate. This would then reach the maximum 30% tax rate by the third year. Crypto miners would be required to record the “amount and type of electricity used, as well as the value of that electricity.” Crypto miners that obtain their power needs off-grid are still liable to the tax and must estimate the electricity expenses generated by any electricity generating facility.
In the blog posted on May 2nd, the government has justified the tax impositions.
The CEA wrote, “Currently, crypto mining 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 blog also cited reports claiming that crypto mining has “negative spillovers” on the environment, quality of life, and electricity grids. They also said that pollution from electricity generation disproportionately affects low-income neighbourhoods and communities of colour while driving up consumer electricity costs. It even implies that crypto mining utilising current clean power (such as hydropower) might have a detrimental influence on the environment by forcing other energy consumers to adopt “dirtier” sources of power.
The crypto community has criticised it, claiming that it is unfair and does not stimulate the usage of sustainable energy. Riot Platforms VP of Research Pierre Rochard slammed the timing of the idea, calling it “the worst moment imaginable for the White House to be drawing attention” to Bitcoin. He also slammed the present status of the global financial and banking systems. Warren Davidson and Mike Flood of the United States Congress have written to the head of the CEA asking for an explanation for the Economic Report. They claimed it demonstrated a negative attitude towards the digital asset ecosystem.
