White House plans to impose 30% tax on crypto mining

According to a new post from the White House Council of Economic Advisers (CEA), the Biden administration is pushing towards imposing an unusual industry-specific tax on miners to pay 30% of their energy use.

Originally, the Digital Asset Mining Excise tax (DAME) was introduced on March 9 as part of President Joe Biden’s FY 2024 budget. The Treasury Department wrote at the time that this tax would “reduce mining activity along with its associated environmental impacts and other harms.”

In an attempt to shed light on the proposal, the CEA released a statement pointing out that crypto miners cause harm to society:

Currently, cryptomining 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 DAME tax encourages firms to start taking better account of the harms they impose on society.

Interestingly, the White House isn’t interested in taxing other very energy-intensive industries. The CEA believes that “cryptomining does not generate the local and national economic benefits typically associated with businesses using similar amounts of electricity.”

According to the blog, crypto mining has a negative impact on the environment, quality of life, and electricity grids, and pollution from power generation particularly affects low-income neighbourhoods and communities of color. It can also increase electricity costs for consumers.

And even when crypto mining uses clean energy sources like hydropower, it can have a negative impact because other electricity consumers may be forced to rely on “dirtier” energy sources:

The CEA’s Twitter thread was heavily criticized by the community and condemned as misinformation by several individuals. In addition, some argued that implementing such a tax would only lead to bitcoin mining being relocated to countries such as Russia.