White House Makes Case For 30% Crypto Mining Tax, Cites Economic And Energy Factors As Key Drive Behind Policy
- The White House has issued a report justifying the proposed Digital Assets Mining Energy (DAME) Tax based on climate and its impact on average citizens.
- Miners would pay 10% of their earnings depending on their energy usage, with a proposed gradual increase to 30% in subsequent years.
- The law has come under heavy fire from crypto executives and pundits, calling it “an unjust, irrational attack” on the sector.
Digital asset miners are under the radar of authorities once again concerning energy consumption and its impact on the environment.
The White House released a report focused on digital asset mining, sustainable development, and “fair” taxation in the sector. From 2024, miners would pay a 10% tax in line with their energy usage. The figure will rise gradually each year until it finally caps at 30%.
The government believes that the tax will help reduce its deficit by $74 million in 2024 and further surge to $444 by 2023, which shows benefits for both the community and the government. The present administration has reiterated that firms must pay the full cost and plan better for the future.
“Firms do not have to pay for the full cost they impose on others; the tax encourages firms to start taking better account of the harms they impose on society,” the report stated.
Digital asset miners in the United States consumed about 50,000-gigawatt hours of electricity last year in mining top assets like Bitcoin (BTC) and Ethereum (ETH), which is almost at par with the total energy consumption of televisions and computers in the country.
As part of the propositions, cryptocurrency miners will be required to disclose the energy usage of their full operations and state its source. Furthermore, the administration stressed that digital asset mining disproportionately affects communities of color as the cost of renewable energy continues to soar.
“Cryptomining does not generate the local and national economic benefits typically associated with businesses using similar amounts of electricity. Instead, the energy is used to generate digital assets whose broader social benefits have yet to materialize.”
DAME Tax comes under heavy fire
Barely a day after the proposed tax was announced, Democratic Presidential Candidate Robert F. Kennedy Jr criticized the administration’s logic on the new policy. While leaning towards digital assets, he termed it “a war on crypto”, adding that elites are threatened by its freedom.
“Bitcoin mining uses about the same as video games, and no one is calling for a ban on those. The environmental argument is a selective pretext to suppress anything that threatens elite power structures,” he argued on Twitter.
Industry experts, including Brian Quintenz, a16z’s Head of Policy, fired back at the government’s decision to go after the purpose of energy use rather than carbon emissions.
“So, apparently, it doesn’t matter where the electricity comes from. If the government doesn’t like how you use the energy, you’ll be penalized,” he stated.
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