White House proposes crypto mining tax

The Biden administration claims the Digital Asset Mining Energy Excise Tax will ensure cryptocurrency miners ‘pay their fair share’

The White House is proposing a 30% tax on the power used for crypto mining, as the amount – and cost – of the energy used to source digital currencies looks likely to increase.

The Digital Asset Mining Energy Excise Tax (DAME) is a key part of the Biden Administration’s proposed budget for fiscal year 2024, and could be implemented gradually over a period of three years, at a rate of 10% per year.

The Council of Economic Advisers, an agency within the executive office of the president, providing objective economic advice, said: “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 administration believes the DAME tax will: make crypto miners “start taking better account of the harms they impose on society”, deal with those who “reduce the amount of clean power available for other uses”, and make crypto miners “pay their fair share of the costs imposed on local communities and the environment”.

Republican opposition

For the tax to come into law, it would need to pass the House of Representatives, which is currently under control of the Republican Party, many of whom are vocal in their opposition to tighter crypto restrictions in the US.

Brian Quintenz, head of policy for a16z crypto, a venture capital fund that has been investing in crypto, and former commissioner at the US Commodity Futures Trading Commission, said: “So, apparently it doesn’t matter where the electricity comes from: coal, gas, 100% renewable, etc. If the government doesn’t like how you USE the energy, you’ll be penalized.”

Texan Republican senator Ted Cruz wants his state to be an “oasis on planet Earth for Bitcoin and crypto”. He took to Twitter to say: “I am proud to lead the fight for the crypto industry in the state. Texas will continue to be the center for crypto innovation.”

Energy usage

With crypto mining using an increasing amount of energy (although still a tiny fraction of total US consumption), the administration claims this leads to adverse environmental effects, as well as an increase in energy prices for the local community sharing an electricity grid with miners.

During the announcement by the Biden administration, a recent Goldman Sachs study was cited, estimating that US crypto mining accounted for approximately 2% of the nation’s power consumption in 2022.

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Written by David Kent

David has more than a decade of sports betting and sports writing experience working with some of the biggest names in the industry. He focuses on articles covering these subjects including how crypto is transforming sportsbooks.

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