US Government May Impose Disciplinary 30 Percent Taxes on Crypto Miners: Details

The idea has been laid out by the US’ Council of Economic Advisors (CEA).

Written by Radhika Parashar, Edited by Siddharth Suvarna | Updated: 3 May 2023 14:41 IST

US Government May Impose Disciplinary 30 Percent Taxes on Crypto Miners: Details

Photo Credit: Unsplash/ Ewan Kennedy

The tax that US is considering on crypto mining is Digital Asset Mining Energy (DAME) excise tax

Highlights

Crypto miners have been flocking to the US after China’s ban on mining
US aims to get some capital inflow with a boom in crypto mining there
Crypto mining is infamous for being power intensive

The US, in recent years, has emerged as a hotspot for crypto miners to establish their operations, especially after China imposed a blanket ban on all crypto-related activities in 2021. Given the environmental concerns and the power intensive nature of crypto mining, the US is mulling on imposing a punitive tax on companies and individuals indulging in crypto mining in the country. President Joe Biden's government is considering a financial renumeration to be added to its federal treasury now that crypto mining is generating job opportunities in the US and is expected to boom in the times to come.

Soon, the US could ask crypto miners to pay a tax equal to 30 percent of the total energy cost that they consumed in mining cryptocurrencies. The idea has been laid out by US' Council of Economic Advisors (CEA).

“One new proposal in this year's Budget, the Digital Asset Mining Energy (DAME) excise tax, is an example of the President's commitment to addressing both long-standing national challenges as well as emerging risks – in this case, the economic and environmental costs of current practices for mining crypto assets (crypto mining, for short). After a phase-in period, firms would face a tax equal to 30 percent of the cost of the electricity they use in crypto mining,” an official blog from the White House said on May 2.

Coinbase Sued for Alleged Unauthorised Collection of Users’ Biometrics

In recent years, the process of mining Bitcoin has become more difficult with more advanced computers operated by mining companies and independent miners having joined the system.

Miners have to solve complex algorithms on advanced computers to mine a Bitcoin. Companies like Samsung and Jack Dorsey's Block are working on special Bitcoin mining chips to make the otherwise power intensive process, energy efficient.

This complex process is responsible for being detrimental to the environment while also adding stress to the power grids of the regions where crypto mining has picked pace.

Bitcoin Mining Chip From Jack Dorsey’s Block Enters Prototype Stage

In November 2021, Electric Reliability Council of Texas (ERCOT) had estimated a fivefold increment in energy loads to support crypto mining and data centres.

Previously, several New York City-based businesspersons had also reached out to governor Kathy Hochul requesting her to deny permits regarding the conversion of the city's old fossil fuel plants into crypto mining centres.

The US authorities have said that even if clean energy is used to facilitate crypto mining, it slashes the availability of clean energy for others, increasing their reliance on electricity produced by fossil fuels while also making that energy more expensive.

“Currently, crypto mining firms do not have to pay for 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. The DAME tax encourages firms to start taking better account of the harms they impose on society,” the blog noted.

The US estimates that it could churn $3.5 billion (roughly Rs. 28,639 crore) in the next decade via DAME tax.

The Vivo X90 Pro has finally made its debut in India, but is the company's flagship smartphone for 2023 equipped with enough upgrades over its predecessor? We discuss this and more on Orbital, the Gadgets 360 podcast. Orbital is available on Spotify, Gaana, JioSaavn, Google Podcasts, Apple Podcasts, Amazon Music and wherever you get your podcasts.

Affiliate links may be automatically generated - see our ethics statement for details.

Comments

For the latest tech news and reviews, follow Gadgets 360 on X, Facebook, WhatsApp, Threads and Google News. For the latest videos on gadgets and tech, subscribe to our YouTube channel. If you want to know everything about top influencers, follow our in-house Who'sThat360 on Instagram and YouTube.

Further reading: Cryptocurrency, Crypto Tax, Crypto Mining, Bitcoin Mining

Radhika Parashar

Email Radhika

Radhika Parashar is a senior correspondent for Gadgets 360. She has been reporting on tech and telecom for the last three years now and will be focussing on writing about all things crypto. Besides this, she is a major sitcom nerd and often replies in Chandler Bing and Michael Scott references. For tips or queries you could reach out to her at RadhikaP@ndtv.com. More