- Biden has proposed a 30% tax on all power used to mine cryptocurrencies.
- The goal of this plan is to decrease mining activities, as stated by the government.
U.S. President Joe Biden unveiled his proposed yearly budget recently. The president laid forth his plans for the next year. The proposal mentioned cryptocurrency mining in the context of the digital asset sector.
In particular, Biden has proposed a 30% tax on all power used to mine Bitcoin and other cryptocurrencies. The proposed excise tax would be implemented gradually over a three-year period, at 10% in the first year, 20% in the second, and 30% in the third.
Negative Environmental and Social Effects
It implies the 30% tax would apply to any company that used its own or rented computer resources to mine Bitcoin or other assets. The goal of this plan is to decrease mining activities, as stated by the government. In particular, there are no tax laws in place at this time that particularly apply to digital assets. There are, however, a few exemptions to the requirements that pertain to broker reporting and cash transactions.
Furthermore, the proposal explained the rationale for the shift by saying that the mining of digital assets has negative environmental and social effects, which may be mitigated if miners were required to pay an excise tax on their power use.
In the proposal, the high energy costs and the vast amount of computing time were noted as significant limitations. It also highlighted the potential dangers to local utilities and the harmful consequences on the environment.
Moreover, companies that mine cryptocurrencies would have to disclose the quantity and kind of power utilized and the “value” of their electricity expenditures.