By Michael Scott
A White House report released on Tuesday suggested the need to impose a 30 percent excise tax on cryptocurrency mining organizations. The proposal is based on the idea that participating in these firms’ profits benefits Americans and the environment. In March, the White House proposed the need to have an energy tax.
Crypto Miners Not Obligated to Incur Total Costs
Specifically, the report showed that the mining firms are not obligated to pay the total costs imposed on others. Besides, the recommended excise tax aims to motivate organizations to be responsible for the dangers they pose to society.
The proposed tax may significantly affect digital asset miners from the start of 2024 and evoke the need for organizations to pay the U.S federal government a tax on electricity costs. The figure will begin at 10 percent and rise annually to 30 percent.
Crypto Mining Tax Introduced to Meet 2024 Budget Shortfall
The White House’s 2024 budget was responsible for introducing the tax and believed it would aid in the reduction of the government’s shortfall by 74 million dollars in the initial year. This figure may rise to nearly 444 million dollars by 2033.
The proposed excise task falls under the Digital Asset Mining Energy (DAME) tax. Equally, it affects digital asset miners whose means of income entails validating transactions on proof-of-work and proof-of-stake networks, for instance, Bitcoin and Ethereum, respectively.
However, the equal application does not consider the significant differences in energy consumption levels.
White House Accuses Crypto Miners of Aggravating Energy Consumption in the US
The White House report approximates that in 2022, United States crypto miners using Bitcoin and Ethereum utilized an estimated 50000-gigawatt hours of energy. This figure is nearly equal to power consumption in home computers and televisions.
For the White House to approximate these numbers, it was critical, to begin with worldwide approximations of crypto mining power and portion out a representative segment for Ethereum and Bitcoin operations.
Proposed Crypto Tax Bill Seeks Disclosure of Power Consumption and Source
Part of the suggested tax requires digital asset miners to reveal the amount of power consumption and its associated source. Besides, it entails revealing if it originates from renewable sources or not. The tax also covers electricity produced off-grid, for instance, the conversion of wasted natural gas.
Various figures have opposed the proposed tax, including Brian Quintez, a16z’s head of policy. According to him, it is critical to emphasize electricity rather than carbon production. Via a Twitter post, he claimed that the source of electricity is a non-issue. One is more likely to be penalized if the government does not like how they utilize the energy.
Biden’s Administration Cites Environmental Damage to Impose 30% Crypto Mining Tax
In addition to voicing environmental concerns, the current administration claims that communities of color are unreasonably affected by digital asset mining due to pollution and the high costs of renewable energy.
According to the report, crypto mining fails to produce the federal and local economics characteristically linked to businesses utilizing the same amounts of power. Rather, the power is utilized in producing digital assets whose vast social advantages are yet to be witnessed.
Kennedy Jr Wonders Why Biden’s Administration is not Banning Other Destructive Sectors?
A day following the report’s release by the White House, Robert F. Kennedy Jr., the Democratic presidential candidate, embraced the administration’s idea. In this case, he became the digital assets’ advocate despite expressing the need for a war on cryptocurrency the previous day.
Via a Twitter post, Kennedy Jr. claimed that despite mining Bitcoin utilizing nearly a similar amount of power as video games, no person is advocating for its ban. Further, he claimed that the environmental argument is a discriminating excuse aimed at overpowering anything that may affect top power structures.