Cryptocurrency has been the bane of PC gamers for years, as “mining hardware” relies on high-end consumer graphics cards. created a massive GPU shortage. But crypto mining has even more disastrous implications for the environment, as staggering amounts of electricity go into creating digital currencies. After years of relative inaction by the US federal government, President Joe Biden is proposing a high tax on energy used for crypto mining.
Biden laid out his plan this week in a direct proposal to US lawmakers. The DAME Act sounds like something Sam Spade might write if he quit being a private detective and ran for the Senate, but the weird acronym stands for Digital Asset Mining Energy Consumption Tax. Citing the environmental impact of electric power production, as well as higher energy prices for everyone else, DAME's end result would be a massive 30 percent tax on energy used for cryptocurrency mining.
“Along with these known costs and risks, crypto mining does not generate the local and national economic benefits typically associated with companies using similar amounts of electricity,” the proposal reads. “Instead, the energy is used to generate digital assets whose broader societal benefits have yet to materialize.” The post on the official White House website cites a US Energy Information Administration report showing that crypto mining consumed more kilowatt-hours than personal computers in 2022, just behind TVs and the Internet. lightning. Estimates for cryptocurrency power production around the world put it up to 240 terawatt-hours per year — about as much electricity as is used by the entire country of Australia.
The DAME Act is not the first time that US government entities have attempted to directly legislate cryptocurrency mining, either to curb or encourage it. Although cryptocurrency laws are still in their infancy, cryptocurrencies can be considered securities or commodities at the federal level and are therefore subject to tax based on their US dollar value. Cryptocurrency exchanges are covered by the Bank Secrecy Act and other federal financial laws. One of the priorities of the Biden administration has been to create a more comprehensive national policy on the regulation of cryptocurrencies. Under the Bloomberg ActDozens of new bills addressing cryptocurrency have been introduced in the House of Representatives and the Senate.
Some individual states are also participating in the cryptocurrency market. Some have restricted their involvement to defining currency transfer terms that allow them to engage with the regulatory framework, and some state courts have simply defined cryptocurrency exchanges as money transmissions under existing law. Some have gone further: In TexasWhere relatively low electricity costs have attracted cryptocurrency miners and cryptocurrency "farms", the state senate has proposed a bill that would allow the power grid operator to more closely regulate the activities of cryptocurrency miners. and energy credits.
The impact of cryptocurrency production on the power grid has become an international issue. In addition to huge amounts of energy being legally converted into digital assets, without generating (as the White House puts it) "the local and national economic benefits typically associated with businesses using similar amounts of electricity," illegal cryptocurrency farms have been discovered. . harnessing the power grid to steal energyand botnets often try divert computer power away from infected PCs for cryptocurrency mining. China and a few other countries have banned cryptocurrency exchanges, though more out of a desire to regulate money transfers than to curb electricity use.
Despite the growing interest in regulating cryptocurrency, Biden's DAME Act has little chance of becoming federal law anytime soon. With Republicans in control of the House of Representatives and Democrats in the Senate, both by razor-thin margins, passing any legislation at this time is bitterly contentious. Impactful policy changes at this level will almost certainly have to wait until after the next election cycle in 2024, assuming one or the other party gains more complete control of the legislative and executive branches.