The White House Council of Economic Activities (CEA) is looking to penalize the crypto mining sector stating that the high energy consumption by crypto miners have spillover effects on the environment and quality of life.
Biden Administration Seeks to Impose 30% Tax on Crypto Mining
The White House Council of Economic Activities (CEA) is proposing to impose a tax on crypto mining in the United States, citing the sector’s high energy consumption and its negative impact on the environment and quality of life.
This move by the Biden administration follows China’s ban on crypto mining in 2021, which led to an increase in crypto miners settling in crypto-friendly states such as Texas.
The CEA is recommending a tax equivalent to 30% of the energy costs incurred by mining companies, which could significantly affect their profits and is an unusual, industry-specific penalty.
The CEA lays out the case for the Digital Asset Mining Energy (DAME) excise tax. In the blog post appearing on the White House website on Tuesday, the CEA wrote:
“Cryptominers’ high-energy consumption has negative spillovers on the environment, quality of life, and electricity grids where these firms locate across the country. 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.”
CEA
In March 2023, the Biden administration put forward an excise tax plan, which was published by the US Treasury Department in a document known as the “Greenbook.” The proposal outlines the administration’s priorities for revenue generation in the upcoming year. According to projections, this plan has the potential to generate billions of dollars in revenue over the next ten years.
Crypto Industry Players Revolt against the Measures
Critics of the proposed tax noted that the crypto-mining industry is been unfairly targeted. Speaking to Yahoo News, Tom Mapes, director of energy policy at the Chamber of Digital Commerce, said:
“This puts a clear line in the sand that they do not like the industry. They are looking for ways to hamstring it. This is just a way to go after the industry which they do not support.”
Tom Mapes
Conversely, the Republican members of Congress have opposed the attempts made by the regulators and the administration to impose penalties on the crypto industry. As the House of Representatives is under Republican control, there is a greater chance that they will not support taxes that aim to penalize the sector.
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