President Joe Biden’s new budget proposal intends to rake in billions from the crypto industry through disputable excise tax that would be charged to digital assets miners for their electricity by 30%. The charge, which is set to kick off in 2025 in stages, is expected to generate almost $10 billion this year and over $42 billion within ten years.
The proposal outlined a plan where companies using computer systems to generate digital currencies would face an additional 30% charge on their electricity expenses. These crypto-mining operations would need to declare their power usage and costs. Similarly, firms renting out computing capabilities would have to reveal the value of the electricity utilized, serving as the basis for the new tax.
“The Budget saves billions of dollars by closing other tax loopholes that overwhelmingly benefit the rich and the largest, most profitable corporations,” the proposal asserts, including “closing a loophole that benefits wealthy crypto investors.”
Fierce Opposition from Crypto Advocates
The mining tax proposal faces resolute resistance from cryptocurrency supporters and legislators. Senator Cynthia Lummis, a Republican, expressed her disagreement on X (formerly Twitter), contending that a 30% levy could effectively eliminate the mining industry’s presence within the United States.
Dave Rodman, a crypto lawyer and founder of The Rodman Law Group, also criticized the proposal, finding it “laughable” to label crypto investors as part of the “oligarch level class.”
The mining tax suggestion isn’t a novel idea, as Biden previously incorporated a comparable plan in his 2024 budget proposal. Furthermore, the administration recently tried to mandate an urgent assessment of miners’ power consumption but encountered legal obstacles, forcing them to withdraw the order.
According to estimates from the Department of Energy, the crypto-mining industry could account for 0.6% to 2.3% of total annual U.S. electricity use. In Texas, a major mining hub, the industry has already raised electricity costs for non-mining residents by an estimated $1.8 billion per year, or 4.7%.
While the budget proposal signals the administration’s recognition of the economic power of Web3 and cryptocurrencies, critics argue that it focuses on suppressing and extracting from the industry rather than fostering innovation.
It’s important to note that Biden’s budget proposal is often considered a wish list or political statement, as new revenue measures must originate in the Republican-controlled House of Representatives, which is currently hostile to the president’s agenda, setting the stage for an uphill battle ahead.
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