Key Takeaways:
- The proposed Digital Asset Mining Energy (DAME) tax, reintroduced by President Biden, imposes a 30% tax on electricity for Bitcoin miners, potentially driving significant industry players out of the U.S.
- Despite environmental claims by the White House, the tax may counterintuitively push mining operations to countries with lower environmental standards, potentially increasing global emissions.
- The policy faces opposition from influential figures and risks economic repercussions, including job losses and reduced tax revenue, while undermining the U.S.’s position as a global leader in Bitcoin mining.
The United States has adopted a notably strict stance on cryptocurrency regulations, evidenced by the green-lighting of Bitcoin ETFs alongside harsh measures.
One such measure particularly impacts the Bitcoin mining industry, an integral sector since Bitcoin’s early days.
BREAKING:
— WhaleFUD (@WhaleFUD) April 22, 2024
President Biden is asking Congress to kill the American Bitcoin mining industry
Despite operating with comparatively cleaner energy than many nations, the federal approach could potentially dismantle this sector.
The Biden administration, not favoring a pro-business stance towards domestic Bitcoin mining, revisited a contentious policy in March.
The proposed Digital Asset Mining Energy (DAME) tax would levy a 30% tax on electricity costs for mining operations.
🇺🇸 President Biden wants a Digital Asset Mining Energy Tax, Which Could Raise $3.5B in 10 Yrs. pic.twitter.com/WCayYiliB1
— Crypto Crib (@Crypto_Crib_) May 3, 2023
This move could drive major players like RIOT Platforms and Marathon Digital Holdings off American grounds.
Senator Cynthia Lummis, a Republican from Wyoming, voiced concerns on social media platform X, stating that the tax “A proposed 30% punitive tax on digital asset mining would destroy any foothold the industry has in America.”
The White House 2025 budget is incredibly bullish on crypto assets, some might even say they believe it’s going to the moon.🚀
— Senator Cynthia Lummis (@SenLummis) March 11, 2024
But a proposed 30% punitive tax on digital asset mining would destroy any foothold the industry has in America.
Likewise, Robert F. Kennedy Jr. criticized the policy, underscoring its potential to harm the industry severely.
Originally introduced in May 2023, the DAME tax was quickly opposed by legislators and industry leaders, leading to its temporary dismissal.
However, Biden reintroduced it in his fiscal 2025 budget proposal, effective from October 1, aiming to generate $3.5 billion over ten years through a phased tax increase.
Biden just unveiled his $7.3 trillion budget proposal for next year (fiscal 2025) which starts Oct 1st. The US govt only collects $5 trillion per year in revenue from all sources.
— Wall Street Silver (@WallStreetSilv) March 11, 2024
So his proposal is $2.3 trillion budget deficit, and that is before the emergency spending that…
While the White House claims the tax ensures miners contribute to covering environmental and community impacts, it overlooks the sector’s growth—from holding 3.4% of global Bitcoin mining capacity in 2020 to 37.8% in 2022, positioning the U.S. as a global leader in the field.
Senator Lummis again criticized the tax on X, describing it as the administration’s attempt to “pick winners and losers.”
A 30% tax hike on any specific industry is a blatant attempt by the administration to pick winners and losers.
— Senator Cynthia Lummis (@SenLummis) May 25, 2023
I will not let President Biden tax the digital asset industry out of existence.https://t.co/GNUgfER8yr
The policy could alienate the president further amidst already low approval ratings and might not even succeed financially if it results in the collapse of the industry.
Miners, especially those using less efficient or even clean energy, could be forced out, moving operations to countries with lower environmental standards, thus contradicting the administration’s environmental arguments.
Moreover, the move could lead to significant job losses and decreased tax revenue, contrasting sharply with Biden’s optimistic revenue projections.
The administration also hints at potential industry shifts to regions with higher pollution, ironically following China’s outright ban on Bitcoin mining.
In defending the DAME tax, the White House pointed to China’s complete mining ban as a form of reassurance.
Biden’s DAME tax on Bitcoin miners would do the following:
— nic "bankful" carter (@nic__carter) May 11, 2023
– increase bitcoin miner emissions
– lower US tax revenue
– empower & fund Russia, China, Iran, Venezuela, and North Korea
A truly idiotic proposal. My latest in @CoinDesk https://t.co/08jv3fuOJZ
Yet, the administration’s inclination to restrict mining, mirroring restrictive global trends, raises concerns about a potential total mining moratorium if the DAME tax fails to pass.
With the DAME tax on the table, the administration could benefit from engaging with the cryptocurrency community, an informed and politically active group, particularly in states with significant Democratic voters.
JUST IN: 🇺🇸 Congressman Warren Davidson confirms that part of the debt limit deal includes the elimination of the 30% DAME tax on electricity for crypto miners 🙌 pic.twitter.com/zSZl4Q0SIn
— Bitcoin News (@BitcoinNewsCom) May 29, 2023
Reevaluating the tax could be crucial not just for retaining electoral support but also for global environmental and economic interests.
About The Author
Fleming Airunugba, a seasoned Web3 and crypto content expert, leverages his deep understanding of blockchain technology to bring the latest and most impactful news to the crypto community.
With a knack for engaging storytelling and strategic content creation, Fleming is dedicated to educating and inspiring his audience with insightful analysis on cryptocurrencies, NFTs, and the future of digital finance.
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