Biden Administration Proposes 30% Tax on Crypto Mining Companies

“We should tax the equivalent of 30% of the electricity cost.”

The White House announced on the 2nd that crypto asset (virtual currency) mining companies should be taxed at 30% of the cost of electricity used for mining.

The Biden administration has put up a “digital asset mining energy (DAME) consumption tax” as one of its proposals in this year’s budget. It will be introduced in phases, with companies eventually having to pay a tax of 30% of the cost of electricity used to mine Bitcoin (BTC).

In addition, since President Biden’s proposal will be discussed in Congress, it is unknown at this time whether it will actually be enacted as a law and to what extent the proposal will be reflected in policy.

The proposal is based on the possibility that cryptocurrency mining companies could lead to rising energy prices and climate impacts due to increased greenhouse gas emissions.

First, the White House said the concentrated and often fluctuating consumption of electricity by mining companies could drive up electricity bills for consumers.

It also explained that even if the local power grid increases capacity in response to demand from mining companies, there is a risk that the increased capacity will be wasted because of the instability of the mining business.

He added that even when cryptocurrency miners use clean, carbon-free energy, they can still have an indirect impact on the environment.

As an example, it argues that the use of hydropower by cryptocurrency businesses would drive up prices as the power consumed would not be available for other uses, increasing overall reliance on carbon-emitting energy sources. are doing.

The White House said cryptocurrencies have yet to benefit society at large, and there is little evidence that cryptocurrency mining companies and others provide local benefits in terms of jobs and economic opportunities.

Finally, he also said that the Digital Asset Mining Energy (DAME) consumption tax is an example of the Biden administration’s efforts to fight climate change and bring down energy prices.

What are the alternatives?

In 2022, the U.S. Congress will hold hearings on the power consumption of cryptocurrency mining. At this meeting, the use of blockchain, which consumes less energy, and the possibility of promoting natural energy were proposed as solutions.

Cornell University professor Ari Juels, for example, explained that adopting PoS (Brew of Stake) instead of PoW (Proof of Work) can significantly reduce energy consumption.

In addition, the CEO of cryptocurrency mining company Bitfury said that the cryptocurrency mining business will provide baseload consumption to renewable energy power plants such as solar power and wind power that have excess power generation capacity. He points out that it can be made profitable.

connection: US House of Representatives, public hearing on power consumption problem of virtual currency mining

Example of a data center that reduces waste gas

Another example is Crusoe Energy Systems, which uses waste gas energy for AI (artificial intelligence) and cryptocurrency mining.

The company reduces greenhouse gas emissions into the atmosphere by using the surplus gas generated when refining gasoline and light oil in oil fields for its data centers. We are also expanding our business in the Middle East, which has many oil fields.

connectionCrusoe expands waste gas cryptocurrency mining to Middle East

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