The White House proposes a 30% tax on crypto mining

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“Instead, the energy is used to generate digital assets whose broader social benefits have yet to materialize.” Death, Taxes, Crypto

The White House is proposing a 30% tax on crypto-mining operations, to better reflect the effects they have on the environment.

The “Digital Asset Mining Energy Excise Tax (DAME)” is intended to address the “economic and environmental costs of current crypto-asset mining practices,” according to a new statement from the White House. “After a phase-in period, companies would face a tax equal to 30% of the cost of the electricity they use in cryptocurrency mining.”

This is a notable move to address growing concerns about the massive environmental footprint of crypto operations, which often comes from polluting electricity sources and the latest regulatory move to cast a shadow over digital currencies once burning.

No benefits

According to a 2022 report from the White House Office of Science and Technology Policy (WHOSTP), crypto mining used between 120 and 240 billion kilowatt hours per year, more than an entire country’s electricity consumption.

In the United States alone, the WHOSTP estimates that crypto consumes up to 1.7% of total electricity consumption, the equivalent of all home computers or residential lighting, and between 0.4 and 0 .8% of total US greenhouse gas emissions.

And at the infrastructure level, The New York Times reported last month that dozens of bitcoin mines across the country are putting immense strain on the power grid and raising electricity prices for nearby residents, although have nothing to do with cryptography.

So what do we have to gain from all this mining? According to the White House, not much, apart from noise and pollution, especially when miners don’t use clean energy.

“Cryptomining does not generate the local and national economic benefits typically associated with businesses using similar amounts of electricity,” the White House wrote. “Instead, the energy is used to generate digital assets whose wider social benefits have yet to materialize.”

Stifling innovation

Unsurprisingly, news of a possible tax sparked outrage in the crypto community.

“So apparently it doesn’t matter where the electricity comes from, coal, gas, 100% renewable, etc.” tweeted Head of Policy at A16z Crypto Brian Quintenz. “If the government doesn’t like the way you use energy, you will be penalized.”

In short, plans to tax crypto mining in the United States are likely to face a lot of opposition.

With analysts predicting that the crypto winter of 2022 may soon be over, the topic will be more relevant than ever as crypto miners may soon be looking for ways to re-enter the market.

Learn more about crypto mining: Crypto mining is even worse for the environment than we thought

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