The White House’s Council of Economic Advisers (CEA) announced Tuesday that Vice President Joe Biden is seeking to impose a punitive tax on crypto mining operations for the “harms they impose on society.”
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The administration proposes a 30% U.S. tax on a mining company’s energy costs, a unique industry-specific penalty that could imperil the profitability of mining companies.
“Currently, crypto mining 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 tax it calls the Digital Asset Mining Energy tax.
While the new tax would not similarly burden other energy-intensive industries, the CEA asserts that crypto mining does not generate the local and national economic benefits typically associated with businesses using comparable electricity.
In a document released by the U.S. Treasury Department on March 9, the Biden administration first proposed the excise tax. The Greenbook outlines the administration’s proposals and priorities for generating revenue over the next fiscal year. Still, such proposals frequently do not survive the legislative process as Congress finalises the nation’s spending plans.
Over the next decade, the tax could generate up to $3.5 billion in revenue, according to the post. The largest U.S. mining companies are Riot Platforms (RIOT), Marathon Digital (MARA), Cipher Mining (CIFR), Greenidge Generation (GREE), BitDeer (BTDR), and CleanSpark (CLSK).
The administration’s CEA also released a report in March outlining its broader concerns with the industry, highlighting the potential economic effects of mining as one such concern. These concerns include potential pollution and the cost to local communities of having mining enterprises relocate. Even mining companies utilising renewable energy might increase the community’s overall energy costs and consumption.
Congressional Republicans have resisted regulators’ and the administration’s efforts to penalise the cryptocurrency industry, so it is unlikely that the Republican-controlled House of Representatives will support punitive taxes on the sector.