The Biden administration has proposed a new tax aimed at making cryptocurrency miners pay back to society for the harm they cause. that is how the White House puts it (opens in a new tab) with the so-called DAME tax meant to encourage talking specifically about โthe damagesโ that such crypto companies can inflict on society as a whole.
โCrypto mining companies currently do not have to pay 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.โ says the White House on the proposal.
"The DAME tax encourages companies to start taking more account of the harms they impose on society."
DAME stands for Digital Asset Mining Energy, and the DAME tax would force โcompaniesโ to pay a tax equal to 30% of the cost of the electricity they use in cryptocurrency mining. Which would certainly eat into the profits massively, if not entirely, and probably render the entire venture pretty much meaningless. Note the use of terminology there, however: "companies".
Currently, the tax appears to be more of a push to tax large mining operations than domestic prospectors. But then there is almost nothing left of the latter.
The reason is that these crypto mining operations not only require massive amounts of electricity, but also increase the risks of local authorities over-provisioning for demand that can come and go rapidly, driving up prices for others in the area, and absorb the green energy capacity there. could be.
โAlong with these known costs and risks, crypto mining does not deliver 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 are yet to be realized. have materialized".
Ethereum, the largest cryptocurrency responsible for the majority of graphics card-based mining, is no longer supported by the actual mining process. Since then "The Merge" late last year (opens in a new tab) it has gone from a proof-of-work algorithm, which used mining to verify transactions and generate fees, to a proof-of-stake algorithm, which does not.
Essentially, ethereum took matters into its own hands long before the US government did anything about it.
But there is still cryptocurrency mining out there today, and that's mostly for non-ASIC-resistant cryptocurrencies, like bitcoin. The bitcoin mining network is in a bit of a lull right now, due to a broader drop in the value of cryptocurrencies, but bitcoin is still expected to be very power-hungry.
He Cambridge Bitcoin Electricity Consumption Index (opens in a new tab) It expects the entire global bitcoin mining network to use slightly more energy per year at 133 TWh than the country of Pakistan (132.3 TWh) and only slightly less than Ukraine (134.3 TWh).
CBECI Regional power data only goes up to January 2022 (opens in a new tab) but at the time, the US was the world's largest bitcoin mining region, following a dramatic drop in China due to strict local mining legislation.
The White House offers insight into US-based cryptocurrency mining energy usage. Using data from the US Energy Information Administration and the US Office of Science and Technology Policy, some of which are estimates, US crypto power usage was expected to drop. surpass all computer energy use by 2022 . Let that sink in.
The Biden administration hopes that the DAME tax, which is just a proposal today, would raise $3.5 billion in revenue over 10 years. Although, clearly, that will depend to a large extent on the cryptocurrency mining that will remain in operation during that time.
