April 19, 2024
Policy & Regulation

Crypto Mining Companies May Face Heavy Taxation Following Biden Administration’s Latest Proposal 

The White House’s Council of Economic Advisers (CEA) has proposed a punitive tax on cryptocurrency mining operations. The Biden administration is advocating for this tax, arguing that it will counteract the “harmful effects” of these operations on society. According to a recent blog post by the CEA, the tax would be equal to 30% of a mining company’s energy costs.  

This industry-specific penalty is a departure from traditional taxation methods and could potentially threaten the profits of cryptocurrency mining businesses. President Joe Biden has made the regulation of cryptocurrency a priority, and this proposed tax is part of the administration’s efforts to crack down on the industry. 

Crypto mining companies are getting away with not paying the full cost of their operations, causing local environmental pollution, higher energy prices, and increased greenhouse gas emissions. This is the message conveyed by the Digital Asset Mining Energy tax, a levy proposed by the CEA.  

Unlike other energy-intensive industries, the CEA believes that crypto mining does not provide the same economic benefits to society as businesses that use similar amounts of electricity. This new tax aims to address this disparity and ensure that the true cost of crypto mining is paid for by those who profit from it.  

The US Treasury Department released a document on March 9, which outlined the Biden administration’s plans to implement an excise tax, according to sources. The document, also known as the “Greenbook,” aims to generate revenue in the next fiscal year. The proposed tax is expected to generate around $3.5 billion in revenue over the next decade. 

While these proposals often do not survive the congressional budget process, if implemented, the tax could have significant impacts on some of the largest mining firms in the United States, including Marathon Digital, Riot Platforms, Cipher Mining, Greenidge Generation, BitDeer, and CleanSpark.  

As concerns regarding the potential economic impacts of crypto mining continue to mount, the administration’s Council of Economic Advisors published a report in March detailing its apprehensions with the industry, citing pollution and the cost to local communities as major issues.  

The report also highlighted that even mining firms that use clean energy may contribute to overall energy costs and usage in surrounding communities. Despite these concerns, Republican lawmakers have resisted efforts to regulate or penalize the industry, which may limit the ability of the administration to impose taxes that would negatively impact the sector. 

Image by Freepik

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