- 1 Crypto mining firms have to pay a DAME tax equivalent to 30% of the electricity used in mining.
- 2 Crypto mining uses advanced technologies and has a negative impact on the environment. It releases harmful gases, causes pollution and is responsible for climate change.
- 3 Now, crypto mining firms will be held accountable for the harm they do to the environment and will be charged accordingly.
Increase in Tax
Under the presidency of Joe Biden, his administration has decided to impose a 30% Digital Asset Mining Energy tax on cryptocurrency miners in an effort to control climate change.
Digital Asset Mining Energy tax is a tax that crypto miners pay to the government in regard to the money made by mining. Money made by mining is considered to be a source of income as any other and you have to pay according to the market value on the day you received them. ‘
For example, if you have successfully mined a cryptocurrency today, then you will have to pay income tax based on the rates of that cryptocurrency today in dollar terms.
Need to Increase tax
As we all are aware, high processing units and advanced technology are needed to mine a cryptocurrency and the process includes tonnes of harmful emissions, the impact of which can be clearly seen on the climate. Keeping the environmental and economic cause of climate in mind, President Biden imposed a 30% DAME tax on crypto mining.
Firms will have to face the tax equivalent of 30% of the electricity used in mining. By this, President aims to decrease mining and save the environment from harmful emissions.
Currently, firms are not paying for the full cost they impose on others. They are not held responsible or asked to pay for environmental pollution, high energy prices, greenhouse gas emissions etc. The DAME tax will help firms to be completely accountable for their deeds.
With this, it is argued that, despite such high cost, risk and large amounts of energy, crypto mining does not generate any national or economic reserves or benefits that could be used by the people, like in other businesses that use the same amount of energy. The benefits of the digital assets are yet to be materialized.
For the same reasons, many countries have banned crypto mining. Like China, any such activity is completely banned since 2021. Along with China, 8 other countries have also banned such activities.
To control crypto mining and other such activities, we still need a national policy. Although, the DAME tax of 30% is just a step towards environmental benefits and reducing climate change. Crypto mining has very negative spillovers on the environment, quality of life, physical health of humans, economic status and pollution in the environment. And, thus needs to be controlled.
The purpose somewhere succeeded too, as the price of Bitcoin fell under $20,000 on the next day of this statement.