The White House’s Council of Economic Advisers (CEA) announced that President Joe Biden is considering implementing a punitive tax on crypto mining operations due to their negative impact on society.
Proposed digital asset mining energy tax
In an online post, the CEA suggested a U.S. tax equivalent to 30% of a mining company’s energy costs, a unique industry-specific penalty that could endanger the profits of such businesses.
The CEA stated that crypto mining firms do not currently bear the full costs they impose on others, such as local environmental pollution, higher energy prices, and the consequences of increased greenhouse gas emissions on the climate.
The CEA argued that crypto mining does not yield the local and national economic benefits usually associated with businesses consuming similar amounts of electricity, unlike other energy-intensive industries.
Potential revenue and congressional opposition
The Biden administration initially proposed the excise tax in a March 9 document published by the U.S. Treasury Department. Although the so-called Greenbook outlines the administration’s revenue-generating proposals and priorities for the coming year, many such proposals still need to make it through the congressional process of finalizing national spending plans.
The proposed tax could generate up to $3.5 billion in revenue over the next decade. Major U.S. mining firms include Riot Platforms, Marathon Digital, Cipher Mining, Greenidge Generation, BitDeer, and CleanSpark.
The CEA also published a report in March detailing broader concerns about the crypto mining industry, including potential pollution, the cost to local communities, and increased overall energy costs and usage.
However, the Republican-controlled Congress has resisted attempts by regulators and the administration to penalize the crypto sector, making it unlikely that they will support taxes targeting the industry.