U.S. President Joe Biden is looking to impose a punitive tax on crypto mining operations for the “harms they impose on society,” the White House’s Council of Economic Advisers (CEA) argued Tuesday in an online post.
The administration’s blog entry made the case for a U.S. tax equal to 30% of a mining firm’s energy costs – an unusual industry-specific penalty that could threaten the profits of such businesses.
“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,” according to the CEA’s description of the levy known as the Digital Asset Mining Energy tax.
While other energy-intensive industries wouldn’t be similarly saddled with the new tax, the CEA contends that “cryptomining does not generate the local and national economic benefits typically associated with businesses using similar amounts of electricity.”
The Biden administration first proposed the excise tax in a March 9 document published by the U.S. Treasury Department. The so-called "Greenbook" lays out the administration's proposals and priorities for generating revenue over the next year, but such proposals often fail to survive the process as Congress finalizes the nation’s spending plans.
The tax could raise up to $3.5 billion in revenue over the next 10 years, the post said.
Some of the largest U.S. mining firms include Riot Platforms (RIOT), Marathon Digital (MARA), Cipher Mining (CIFR), Greenidge Generation (GREE), BitDeer (BTDR) and CleanSpark (CLSK).
The administration's Council of Economic Advisors also published a report in March detailing its wider concerns with the industry, and it highlighted the possible economic effects of mining as one such issue. These concerns include possible pollution and the cost to local communities of having mining firms move in. Even mining firms that use clean energy might raise the overall energy costs and usage of the community around them, the post said.
Congressional Republicans have resisted efforts from regulators and the administration to penalize the crypto sector, so the Republican-controlled House may not be likely to embrace taxes that punish the industry.