- Crypto mining contributes to climate change.
- DAME tax levies a proportional excise tax on energy used by miners.
- Tax revenue can fund sustainable initiatives and encourage cleaner practices.
In a budget proposal for the fiscal year 2024, US President Joe Biden suggested a new tax on cryptocurrency mining. Companies involved in crypto mining—the process of mining new cryptocurrencies by solving complex cryptographic problems and verifying transactions—will be subject to the Digital Asset Mining Energy (DAME) excise tax. 30% of the price of the electricity utilized for cryptocurrency mining will be the tax.
The enormous energy requirements of cryptocurrency mining have an adverse effect on the environment, power grids, and the communities in which these businesses are based. The DAME tax attempts to force cryptocurrency miners to shoulder their fair part of the costs placed on society, such as local environmental degradation, higher energy prices, and greater greenhouse gas emissions.
The New York Times recently published an article highlighting the quantity of the power consumption linked with 34 of the largest crypto-mining operations, which they calculated to be equivalent to the power used by the nearby 3 million residences. In the United States, crypto mining consumed roughly the same amount of electricity in 2022 as all of the nation’s household lighting or personal computers combined.
Miners Paying Their Fair Share of Costs
Even when miners use current clean power, cryptocurrency mining has an environmental impact. Crypto miners’ increased electricity use decreases the quantity of clean power available for other applications, driving up prices and putting more of an emphasis on dirty electricity sources overall.
Over ten years, it is predicted that the DAME tax will generate $3.5 billion. It is just one illustration of the Biden Administration’s initiatives to combat climate change, energy costs, and guarantee the ethical development of digital assets. A national strategy is required to prevent crypto mining from simply being shifted from one local community to another because other nations are also taking steps to ban the mining of crypto assets.
Overall, the DAME tax is a step toward addressing the financial and environmental costs associated with current crypto mining practices and ensuring that crypto miners pay their fair share of the costs they place on society.