The White House Council of Economic Advisers (CEA) has proposed a punitive tax on crypto mining operations for the “harms they impose on society.” The Biden administration seeks to introduce a 30% tax on mining firm’s energy costs, an atypical industry-specific penalty that could potentially impact their profits. In their blog post, the CEA argued that cryptomining firms do not pay the full cost of local environmental pollution, higher energy prices, and the consequences of increased greenhouse gas emissions on the climate.
While other energy-intensive industries would not be subject to this new tax, the CEA maintains that cryptomining fails to generate the local and national economic benefits commonly associated with businesses consuming similar amounts of electricity. This proposal was first suggested in the U.S. Treasury Department’s “Greenbook” on March 9, which outlines the administration’s proposals and priorities for generating revenue over the next year. However, many proposals do not make it through the congressional process.
Should this tax be implemented, it could raise up to $3.5 billion in revenue during the next decade. Some of the largest U.S. mining firms that may be affected include Riot Platforms, Marathon Digital, Cipher Mining, Greenidge Generation, BitDeer, and CleanSpark.
A recent report published by the administration’s Council of Economic Advisers emphasizes its broader concerns with the industry and highlights the possible economic effects of mining, including potential pollution and the costs to local communities. The report suggests that even mining firms using clean energy could still raise the overall energy costs and usage in their surrounding communities.
However, the implementation of this tax faces resistance from congressional Republicans, who have opposed efforts to penalize the crypto sector. As such, the Republican-controlled House may not support taxes specifically targeting the industry. Despite this, it is worth considering whether such a tax could effectively tackle the environmental concerns associated with cryptocurrency mining, even if at the cost of industry growth.
While the tax proposal may seem overbearing, the push towards greener practices in the cryptomining industry may help reduce environmental damage and long-term energy costs associated with mining. It is essential for governments and the crypto community to work together to balance the environmental impact of cryptocurrency mining and reshape practices to ensure that the industry remains sustainable and innovative going forward.