- The Biden administration renewed its tax proposal against Bitcoin miners.
- Bitcoin miners will be taxed on electricity, regardless of source.
- The mining industry calls the proposal an attempt to suppress cryptocurrency.
Last year, the Biden administration fired a shot across the bow of Bitcoin miners with its proposed Digital Asset Mining Energy (DAME) tax. The proposal sought to impose a 30% tax on electricity used by miners to curb the touted environmental damage caused by cryptocurrency mining.
While the proposal was assumed to have been shelved, the latest fiscal year revenue proposals report from the White House sees an update on the DAME tax, triggering a backlash from Bitcoin miners who claim the Biden administration is attempting to suppress Bitcoin.
Bitcoin Miners Cry Foul
Leading the backlash from Bitcoin miners, Riot Platform researcher Pierre Rochard denounced the reasons for implementing the DAME tax proposal as dubious at best, adding that he believes this is an attempt by the Biden administration “to suppress Bitcoin and launch a CBDC.”
Rochard’s criticism extended to the proposal explicitly stating that miners who self-generate electricity via renewable sources, such as solar or wind, would still be subject to the DAME tax. This contradicts the proposal’s claims of incentivizing green energy adoption.
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Crypto investor Marty Bent joined Rochard in slamming the DAME tax proposal, accusing the White House of pushing an anti-Bitcoin narrative divorced from evidence. Bent argued that Bitcoin mining incentivizes cheap energy and uses surplus and wasted electricity.
Despite Bent’s points on Bitcoin mining providing a useful economic incentive for capturing surplus energy, the Biden administration’s DAME proposal aims to curtail cryptocurrency mining activity through a targeted excise tax.
What Is DAME?
The Biden administration seeks to reduce cryptocurrency mining activity by imposing a 30% excise tax on the cost of the electricity used in the mining process. The proposal is justified under the guise of reducing the environmental impact and grid risk posed by the intensive energy demands of crypto mining.
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Bitcoin miners would be required to report their electricity usage and costs, establishing a tax base tied directly to their energy consumption. Critically, as Rochard noted, this reporting requirement extends to off-grid electricity sources using renewable sources like wind and solar.
The 30% tax would be phased in gradually over three years, starting at 10% in year one after the December 31, 2024, effective date. This would increase to 20% in year two before reaching the full 30% rate in year three and beyond.
On the Flipside
- The US Department of Energy recently sent mandatory data disclosures to Bitcoin miners, which were subsequently challenged as unlawful.
- The US provides 35.4% of the BTC hash rate, making it the leading mining country following China‘s 2021 ban.
- A growing movement is challenging climate change policy, with skeptics stating climate regulations increase taxes and government control.
Why This Matters
The implications of this tax could be far-reaching for the crypto industry and its future in the US. Against the ongoing climate change debate, where both sides remain steadfast, an administration hell-bent on pushing the green agenda will only drive mining operations to relocate to more favorable jurisdictions. This is counterintuitive when considering the long-term perspectives on revenue and innovation.
Bitcoin miners push back against mandatory energy data disclosures. Read more here:
Bitcoin Miners Win Round One Against Biden Administration
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