- Bitcoin mining continues to draw criticism from governments.
- In the U.S., President Joe Biden’s administration now plans to impose harsh taxes on crypto mining.
- The plan has attracted significant pushback from Bitcoin proponents.
Bitcoin mining is a polarizing topic, even within crypto spaces. The high energy use of the network validation process has often served as fodder for arguments against the technology, leading several governments to consider cracking down on the activity in various instances.
In the latest case, President Joe Biden’s administration has further highlighted plans to impose a stringent tax regime on crypto mining in a blog post on Tuesday, May 2. The Digital Asset Mining Energy (DAME) excise tax, as it is called, would see miners pay 30% of the electricity they consume in taxes, according to the White House Council of Economic Advisers. DAME is included in the administration’s fiscal budget for 2024 and is projected to raise an estimated $3.5 billion in ten years.
The Biden administration argues that crypto miners are not held accountable for the perceived “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” due to their energy use. The administration further claims that crypto mining fails to offer the same economic benefits associated with industries with similar energy usage.
Sponsored
The Bitcoin community, however, begs to differ.
Bitcoiners Poke Holes at the White House’s Claims
The Bitcoin community has unsurprisingly not taken the White House’s claims lying down, with several influential community members taking to Twitter to bash the Biden administration’s claims and priorities.
Sponsored
Riot Platforms Vice President of Research Pierre Rochard asserted that this was the worst time for the White House to draw attention to Bitcoin, suggesting that it would only drive more people to the cryptocurrency in the wake of U.S. banking concerns.
Joshua Hendrickson, associate professor and department chair of the Department of Economics at the University of Mississippi, argued that it was problematic to herald electric vehicles and criticize Bitcoin mining.
Andrew M. Bailey, a researcher at the Bitcoin Policy Institute, criticized clamping down on how energy is used instead of focusing on improving how it is produced to fight climate change. He further suggested that the government was interfering with people’s choices.
Bitcoin mining is notably not directly responsible for greenhouse emissions, and proponents often emphasize the increasing reliance on clean energy sources. Still, critics argue that the high energy demand uses energy that other industries would have otherwise used. These critics suggest electricity distributors are forced to continue to rely on fossil fuels to meet the increased demand crypto mining brings to the grid.
The Biden administration first introduced the DAME tax proposal in March. The proposal would need approval from Congress to become law.
On the Flipside
- Despite the White House’s argument that other jurisdictions like China are clamping down on Bitcoin mining, the Russian government plans to create and work with institutions to mine Bitcoin for international settlement.
- States in the U.S. have signed bills to enshrine the right to mine cryptocurrencies.
Why You Should Care
The U.S. became the largest miner of Bitcoin after China’s clamp-down on cryptocurrencies, as miners fled to more accommodating regions. The tax proposed by the Biden administration could lead to a similar exodus.
Read more about how Riot Platforms bashed the New York Times for its attack on Bitcoin mining:
Riot Platforms Slams New York Times’ “Politically Driven Attack on Bitcoin Mining”
The U.S. could be edging closer to developing a crypto regulatory framework; read more here:
U.S. Closes in on Crypto Consensus Amid Plans for SEC & CFTC Collab
