Biden administration pushes for 30% electricity tax in swipe at cryptocurrency miners

US President Joe Biden's administration is campaigning for a tax on cryptocurrency miners equal to 30% of the cost of the energy they use, citing what it calls "negative drift" from the industry. The move follows a series of legal threats against crypto exchanges by regulators in what industry insiders have said will drive crypto and blockchain technology out of the US.

See related article: Arkansas joins Montana, Texas with bills on guidelines and protection for Bitcoin miners

Fast facts

• in a tuesday blog post Titled "The DAME Tax: Making Crypto Miners Pay the Costs They Impose on Others," the White House Council of Economic Advisers said that while crypto assets are virtual, "the energy consumption linked to their computationally intensive production is very real and imposes very real costs.”
• “The high energy consumption of crypto miners has negative effects on the environment, quality of life, and the power grids where these companies are located across the country,” the blog said, adding that the environmental impacts of mining operations they exist even when miners use existing clean energy. .
• “Crypto mining does not generate the local and national economic benefits typically associated with companies using similar amounts of electricity. Instead, the energy is used to generate digital assets whose broader societal benefits have yet to materialize, as explained in the President's Economic Report,” according to the blog.
• In March, the Biden administration proposed the “Special tax on mining energy of digital assets” as part of this year's budget Published by the United States Department of the Treasury. The proposal would take effect for fiscal years beginning after December 31, 2023, according to the document. The excise tax would be phased in over three years at a rate of 10% in the first year, 20% in the second, and 30% thereafter.
• The Council of Economic Advisers estimates that the excise tax could raise $3.5 billion over 10 years.
• While the government appears to be targeting cryptocurrency miners, the Securities and Exchange Commission (SEC) has cracked down on cryptocurrency trading platforms. In February, the regulator fined US crypto exchange Kraken and closed its holding program, a move the SEC said was "a win for investors." In March, she issued a call well notice toward Coin Base Exchange and warned that it was considering legal action against the company for its cryptocurrency staking services and other products.
• Last month, the SEC cashed in on Seattle-based crypto exchange Bittrex to operate an unregistered exchange.
• However, some US states are rolling out a welcome mat for crypto miners, with Arkansas last month joined Montana and Texas propose legislation to regulate Bitcoin mining and offer legal protection to mining companies.

See related article: Coinbase Says SEC Legal Threats Punish Transparency, Undermine Public Listing Process