Biden Administration Proposes 30% Tax on Electricity Used for Cryptocurrency Mining
Summary:
In his upcoming budget proposal, President Joe Biden plans to reintroduce a 30% tax on electricity used for cryptocurrency mining. The administration highlights the lack of legislation addressing digital assets and wishes to impose an excise tax on digital currency mining. If approved, crypto mining firms will be required to report their electricity usage, regardless of whether they generate their own power or purchase it off-grid. The tax, intended to be implemented after December 31, 2024, has gained criticism from people within the industry who fear it may threaten Bitcoin and prompt the advancement of a central bank digital currency.
In his forthcoming budget proposition, President Joe Biden of the United States revisits the potential of instating a 30% levy on electricity used for cryptocurrency mining. The administration's document entitled "Fiscal Year 2025 Revenue Proposals" emphasized the lack of relevant legislation regarding digital assets, beyond the reporting of cash transactions and brokers. Consequently, there is a push to implement an excise tax, commonly levied on goods like gasoline, on digital currency mining. As stated by the Biden administration: “All businesses involved in digital assets mining through use of computing resources, either owned or leased, will be liable for an excise tax equal to 30 percent of power costs involved in said activity.” The proposal necessitates cryptocurrency mining companies to account for the amount and category of electricity consumed, as well as its value if sourced externally. Similarly, miners who rent processing power are compelled to declare the electricity’s worth, provided by the company from which they leased the capacity. This value shall consequently form the tax base. The administration projects this initiative will take effect for taxable periods after December 31, 2024, to be introduced over three stages: 10% in the initial year, 20% the subsequent year, then 30% from the third year onwards. Cryptocurrency mining companies that self-generate electricity are also subject to this tax. This includes those businesses that generate or purchase “off-grid” power, which will be required to pay 30% tax based on their approximated electricity expense. Pierre Rochard, Vice President of Research at Bitcoin mining company Riot Platforms, argued that operations utilizing wind or solar power will suffer, expressing the suspicion that this may be a tactic to suppress Bitcoin, and advance a central bank digital currency (CBDC). U.S. Senator Cynthia Lummis criticized the proposed tax declaration, arguing that despite the budget's recognition of cryptocurrency signifying bullish sentiment from the administration, a 30% tax may compromise the industry's establishment in the U.S. Biden's administration previously proposed a 30% tax on electricity employed by cryptocurrency miners on March 9, 2023, within the 2024 budget proposal.
Published At
3/12/2024 11:03:18 AM
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