The White House’s attempt to marginalize the domestic crypto industry is taking another step with the introduction of the Digital Asset Mining Energy (DAME) excise tax. This proposed levy would add 30% to electricity costs for miners, which could potentially force them to leave the US in search of more financially viable locations. One might argue that it is not the responsibility of Bitcoin miners to decarbonize the electricity they purchase; nevertheless, this tax seems to target miners unfairly.
Though the tax aims to raise $3.5 billion in revenue over 10 years and hold miners accountable for costs imposed on local communities and the environment, these objectives may not be met. In fact, the consequences could be quite the opposite – increasing emissions associated with Bitcoin mining by pushing miners into dirtier jurisdictions, not raising money as miners leave the US, and empowering adversaries like Russia, China, Venezuela, and Iran by making their state-sanctioned mining operations more profitable.
Proponents of this tax may believe that governments globally will impose similar levies on Bitcoin miners, but this seems to be wishful thinking. While the US might have some influence over its own domestic mining operations, it cannot necessarily sway miners in other countries. The relocation of miners from their home country to places like Kazakhstan, which has a highly fossil-fueled power grid, would only serve to increase their carbon emissions.
In light of these concerns, it’s worth considering that Bitcoin miners are not inherently detrimental to the environment or local communities. They are essentially data centers that do not produce pollutants or toxic waste. By consuming energy in rural areas where electricity is cheap, miners can help utilities monetize by using cheap or negatively priced power when no one is buying it. During times of grid scarcity, miners can dial down their consumption, allowing energy to flow back to households in need.
Some miners, like Iris Energy or Terawulf, even prioritize the use of renewable energy sources in their operations, supporting the buildout of new, clean power generation facilities. However, the DAME tax could jeopardize the potential of the mining industry to both stabilize increasingly renewable grids and support new renewable installations like wind and solar.
Unfortunately, the Biden Administration’s stance on the DAME tax seems to reveal a technologically regressive, de-growth agenda. By potentially banning an industry that could help transform the power grid and support renewable energy, the administration is undermining its own objectives. Instead of achieving the tax’s stated goals, it only stands to empower America’s adversaries and place undue burden on the crypto mining community. Policymakers would benefit from a more objective evaluation of the implications of such actions in order to make informed decisions.
Source: Coindesk
