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The White House Suggests Imposing a Punitive Tax on Crypto Mining - Crypto Economy

source-logo  crypto-economy.com 03 May 2023 06:00, UTC

As per the latest reports, the White House is considering introducing a tax in the recent federal budget, aimed at demanding crypto miners to pay approximately 30% of their total energy costs. The Biden administration claims that the tax has become increasingly necessary based on the harm crypto mining operations impose on society and the environment.

Currently, the masses believe that the 30% tax requirement is an unusual industry-specific penalty that could greatly jeopardize the profits of such thriving industries. As of now, crypto mining firms are not required to pay for the full costs that they impose on others. The costs in the discussion include local environmental pollution, higher energy prices, and the widespread impacts of greenhouse gas emissions on the climate.

The CEA stated:

“Cryptominers’ high-energy consumption has negative spillovers on the environment, quality of life, and electricity grids where these firms locate across the country.”

Just recently, Proof-of-Work (PoW) mining has become a political issue, with a series of advocates pushing back the efforts against restricting mining efforts. Considering how other industries would not be affected by such a tax in comparison to crypto mining firms, the CEA added that crypto mining does not guarantee the generation of benefits on a local and a national level based on the amount of energy used.

They further added,

“The environmental impacts of cryptomining exist even when miners use existing clean power. For example, in the case of communities with hydropower where cryptomining operations are often located, increased electricity consumption by cryptominers reduces the amount of clean power available for other uses, raising prices and increasing overall reliance on dirtier sources of electricity.”

The White House Wages a War on Crypto Mining

The White House initially proposed the excise tax in early March which laid out the proposals and priorities for generating greater revenue for the next year. However, such proposals fail to make it to the end as Congress has a major role in finalizing the country’s spending plans.

Over time, the White House has been detailing concerns with the crypto industry and has highlighted the possible economic effects of crypto mining as one of the many issues. Similarly, it is a known fact that the White House is keeping a close eye on the developments in the crypto market. Plus, it also lends support to regulatory authorities, supporting their regulating crackdown on the crypto space.

In a wider context, the concerns around crypto mining include pollution and cost to local communities as crypto mining firms continue to develop. Even the crypto mining firms that resort to the use of clean energy may raise the energy costs and usage of the community around them.

While referring to a news report, the White House quoted,

“…the amount of electricity used in cryptomining in the United States in 2022 was similar to what is used to power all the country’s home computers or residential lighting.”

The masses believe that imposing such taxes and suppressing their business operations would instigate mining companies to depart from American soil, triggering an outflow of innovation and capital to other jurisdictions. At the same time, some people argue that the tax would completely ruin Bitcoin and a number of other cryptocurrencies, eventually paving the way for the collapse of the entire network.