Crypto Mining Firms Face 30% Energy Cost Tax as Biden Administration Takes Aim

By 0xGorki 05/3/23 5:03 AM

In a move that could have significant implications for the crypto mining industry, the White House’s Council of Economic Advisers (CEA) argued on Tuesday for a punitive tax on crypto mining operations in the US.

According to an online post by the CEA, the 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 tax, known as the Digital Asset Mining Energy tax, would equal 30% of a mining firm’s energy costs.

The Biden administration had proposed the tax in a document published by the US Treasury Department in March, which outlines the administration’s proposals and priorities for generating revenue over the next year. The tax could generate up to $3.5 billion in revenue over the next decade, according to the post. However, proposals like this often fail to survive the process as Congress finalizes the nation’s spending plans.

The CEA argued that the mining industry does not generate the same economic benefits as other energy-intensive industries, and therefore should be subject to a specific penalty. The report also highlighted possible pollution and the cost to local communities of having mining firms move in, even if they use clean energy. Some of the largest US mining firms include Riot Platforms, Marathon Digital, Cipher Mining, Greenidge Generation, BitDeer, and CleanSpark.

The proposal is likely to be met with resistance from Congressional Republicans, who have opposed efforts to regulate the crypto sector. If the tax were to be imposed, it could threaten the profits of mining firms and have broader implications for the crypto industry in the US.

Overall, the proposal represents a significant development in the ongoing debate around the environmental impact of crypto mining and the role of government in regulating the industry. It remains to be seen whether the tax will be implemented and what impact it will have on the industry as a whole.