In recent news, President Joe Biden and Republican House Speaker Kevin McCarthy have closed in on a deal to raise the US debt ceiling, with a plan to get Congress on board this week. This comes in response to Treasury Secretary Janet Yellen’s warning that if the debt limit is not raised or suspended by June 5, the Treasury would have insufficient resources to satisfy the government’s obligations.
However, one element noticeably missing from the agreement is a tax on cryptocurrency mining, otherwise known as the Digital Asset Mining Energy excise tax (DAME). This absence has raised some eyebrows, as the tax was initially proposed in the administration’s budget for the fiscal year 2024 back in March.
The proposed tax would have required companies to pay a tax equal to 30% of the cost of the electricity used, implemented next year and phased in gradually over three years. This would essentially increase the rate by 10% per year, eventually reaching the target 30% rate by the end of 2026. But with the tax now missing from the current deal, it appears that the controversial DAME has been scrapped, at least for now.
On one side of the argument, proponents of the tax believe that it could help generate substantial revenue for the government, while also promoting environmentally friendly practices within the cryptocurrency mining industry. In line with this, the Biden administration has shown a keen interest in emphasizing more sustainable energy solutions and addressing climate change.
However, on the opposite side, critics argue that the US should be cautious when it comes to taxing the burgeoning cryptocurrency mining industry. Instead, they assert that regulations should encourage innovation and growth, rather than stifling it. One such critic, Republican Sen. Cynthia Lummis of Wyoming, has accused the Biden administration of picking “winners and losers.”
“I will not let President Biden tax the digital asset industry out of existence,” she tweeted last week. Lummis had previously pushed back against the DAME proposal during the Bitcoin 2023 conference in Miami, reassuring the crowd that the tax plan wasn’t going to happen.
In response to a question from Pierre Rochard, Vice President of Research at Riot Platforms, a bitcoin mining company, Republican Rep. Warren Davidson confirmed on Twitter that the tax had indeed been removed from the deal. “Yes, one of the victories is blocking proposed taxes,” he said.
While it seems that the cryptocurrency mining tax is off the table for now, the discussions surrounding the balance between innovation, regulation, and sustainability within the crypto industry are far from over. As the technology continues to evolve and gain more mainstream attention, it will be important for policymakers to approach the matter with caution, ensuring that legislation benefits both the market and consumers.
Source: Cryptonews
