Last Updated on May 3, 2023 by Bitfinsider
The government of U.S. President Joe Biden underlined that it wants all cryptocurrency mining firms to pay a new tax with a 30% electricity cost cap.
In a blog post published Monday, the White House emphasized aspects of the Digital Asset Mining Energy (DAME) tax that were initially proposed in March.
Proof-of-work Crypto mining is contentious because it consumes a significant amount of electricity to compute and verify transactions on the blockchain. Bitcoin mining dominates the industry. According to Digiconomist, Bitcoin now consumes more electricity than Finland, Belgium, or the Philippines.
The United States has taken the lead as a global hub for Bitcoin mining after China banned the practice in 2021. According to the tax proposal, which aims to “reduce mining activity” in America, this growth will be reversed.
According to the statement, “The computational effort involved in mining can be substantial and can therefore require a correspondingly large amount of energy. The increase in energy consumption attributable to the growth of digital asset mining has negative environmental effects and can have environmental justice implications as well as increase energy prices for those that share an electricity grid with digital asset miners. Digital asset mining also creates uncertainty and risks to local utilities and communities, as mining activity is highly variable and highly mobile. An excise tax on electricity usage by digital asset miners could reduce mining activity along with its associated environmental impacts and other harms.”
It might be difficult for Biden’s initiatives to become law. In the current political climate, the budget requests made by the president reflect the goals of the administration rather than being entirely adopted by Congress. Some laws might pass through a more fragmented legislative process.
The Biden Administration claims that Bitcoin miners place a burden on society at large in the blog post, which was authored by the Council of Economic Advisors of the White House. It said: “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. Cryptominer’s intensive and often volatile power consumption also can push up electricity prices for consumers and can increase risks for local electrical grids — straining equipment, causing service interruptions and safety hazards.”
The CEA has created a graph demonstrating that in the US, cryptocurrency now consumes more energy than PCs, fans, freezers, and washers combined.
Additionally, according to the Biden Administration, cryptocurrencies do not significantly influence positive economic activity. “Research has shown that slight improvements in local tax revenue are more than offset by higher energy prices for businesses and consumers. There is little evidence that local communities will benefit in the form of jobs or economic opportunity,” it added.
Hardware wallets are safe and secure devices that can be used offline. They keep your cryptocurrency offline, making it impossible for you to be hacked. To find out more on the leading hardware wallets, you may view our reviews here: Ledger & Trezor
Disclaimer: The views and opinions expressed by the author, or any people mentioned in this article, are for informational purposes only, and they do not constitute financial, investment, legal, tax or other advice. Investing in or trading cryptocurrency or stocks comes with a risk of financial loss.