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March 12, 2024Biden resurrects 30% crypto mining tax in new budget proposal
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In the recently unveiled budget proposal for 2025, President Joe Biden has reintroduced the idea of imposing a 30% tax on electricity used by cryptocurrency miners in the United States. This proposal aims to address the current gap in tax laws regarding digital assets and to generate revenue from the growing crypto mining industry.
Tax Proposal Details
- The proposed tax would be levied as an excise tax, similar to taxes imposed on goods like fuel.
- Crypto mining firms would be subject to a 30% tax on the costs of electricity used for mining activities.
- Companies must report the amount and type of electricity used, as well as the value of externally purchased electricity or leased computational capacity.
- The tax would be phased in over three years: 10% in the first year, 20% in the second year, and 30% in the third year.
- It would apply to both mining firms that generate their own electricity and those that purchase power externally or operate off-grid.
Reaction from Industry and Politicians
- Pierre Rochard, vice president of research at Riot Platforms, believes the tax proposal is aimed at suppressing Bitcoin and promoting a central bank digital currency (CBDC).
- U.S. Senator Cynthia Lummis opposes the tax, arguing that it would harm the crypto industry’s growth in the United States.
- This is not the first time the Biden administration has proposed such a tax; a similar attempt was made in the 2024 budget proposal.
Implications and Potential Outcomes
- If implemented, the tax could significantly impact the profitability of crypto mining operations in the United States.
- It may also lead to migration of mining activities to countries with more favorable regulatory environments.
- The proposal reflects the administration’s efforts to regulate and tax the rapidly growing cryptocurrency sector as part of broader fiscal policy goals.
President Biden’s proposal to impose a 30% tax on electricity used by crypto miners underscores the government’s increasing scrutiny of the cryptocurrency industry. While intended to generate revenue and regulate the sector, the proposal has drawn criticism from industry experts and politicians concerned about its potential negative impact on innovation and economic growth.
