President Joe Biden’s administration is moving to impose a punitive tax on cryptocurrency mining operations, citing “harms they impose on society.” The move was disclosed by the White House’s Council of Economic Advisers (CEA) in a blog post on May 2.
U.S. Seeks 30% Tax on Crypto Mining Energy Costs
According to the CEA, the administration is seeking a tax of up to 30% of mining companies’ energy costs in the country – a policy that could negatively impact the profits of these entities. The move is part of a new proposal in this year’s budget dubbed the Digital Asset Mining Energy (DAME) excise tax.
“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,” the CEA said.
In the blog post, the CEA cited one recent report by the New York Times that highlighted the rate of the power usage associated with 34 of the biggest crypto mining operations, which the news media estimated as equal to the power used by the surrounding 3 million homes.
Crypto Mining Power Usage in the U.S.
The White House Council of Economic Advisors stated that the amount of energy used in crypto mining in the U.S. last year was similar to what is used to power all the country’s home computers or residential lighting. According to the Council, these miners’ high energy usage has a negative effect on the environment, quality of life, and electricity grids.
“Alongside these known costs and risks, cryptomining does not generate the local and national economic benefits typically associated with businesses using similar amounts of electricity,” the Council added.
According to the CEA, the primary aim of the proposal is to make sure crypto miners pay their fair share of the costs imposed on local communities and the environment. If the proposal eventually gets approved by the U.S. Congress, it is estimated to raise around $3.5 billion in revenue over 10 years, according to the Council.
