The administration of US President Joe Biden has proposed a 30% excise tax on electricity used for cryptocurrency mining, such as Bitcoin.
Biden administration is proposing a 30% tax on electricity used by #bitcoin miners, even if you are off-grid using your own solar and wind generation. All of the reasons they provide are pretextual, their real reason is that they want to suppress Bitcoin and launch a CBDC. pic.twitter.com/juNHvO2NBx
— Pierre Rochard (@BitcoinPierre) March 12, 2024
The document claims that the increasing energy consumption for digital asset mining negatively impacts the environment and leads to higher energy prices.
“Mining also creates uncertainty and risks for local utilities and communities because this activity is highly variable and mobile,” the proposal states.
The tax is expected to be introduced gradually: 10% in 2025, 20% the following year, and reaching 30% thereafter.
The taxable base will be the electricity consumed for mining, even if generated from off-grid sources.
Pierre Rochard, Vice President of Research at Riot Platforms, described the reasons for the excise as “pretextual.” He suggested the true aim is to “suppress Bitcoin to launch a CBDC.”
Commentators questioned his assumptions, noting that the decision to introduce a digital dollar is made by Congress, not the president’s administration. Jerome Powell, head of the Federal Reserve, confirmed this at recent Senate hearings.
The authors of the excise proposal stated it aims to reduce mining activity to mitigate the listed negative effects.
Senator Cynthia Lummis criticized the initiative, arguing that the “confiscatory tax” would deprive the crypto industry of “any foothold” in the US.
The White House 2025 budget is incredibly bullish on crypto assets, some might even say they believe it’s going to the moon.?
But a proposed 30% punitive tax on digital asset mining would destroy any foothold the industry has in America.
— Senator Cynthia Lummis (@SenLummis) March 11, 2024
US Authorities Focus on Mining
In May 2023, the Biden administration’s Council of Economic Advisers had already proposed including a 30% tax on electricity used by miners in the federal budget. Experts traditionally cited high energy consumption as a threat to the environment and communities.
The proposal faced criticism from industry representatives. Marathon Digital CEO Fred Thiel stated that the planned fiscal levy would cause cryptocurrency mining businesses to leave the US.
In 2023, it became known that the industry attracted authorities’ attention for another reason: concerns over national security due to Chinese mining companies operating in the country.
In January 2024, the US Department of Energy’s Energy Information Administration initiated a survey of miners regarding energy consumption. The agency planned to collect data on demand, geographical distribution of consumption, and sources of generation over six months.
Riot Platforms and the industry group Texas Blockchain Council filed a civil lawsuit in Texas demanding to stop the “emergency data collection” by authorities.
The court sided with industry representatives. The instance ordered the agency to cease the survey, destroy the collected information, and cover the plaintiffs’ related expenses.
ICYMI: Riot, along with @TXblockchain_ and @DigitalChamber, filed a lawsuit pushing back on government overreach targeting our industry.
As a result, the federal govt agreed to end an “emergency” survey that would have published miners’ sensitive business information, without…
— Riot Platforms, Inc. (@RiotPlatforms) March 4, 2024
The US became the leader in Bitcoin hash rate share in 2021, overtaking China.
In the following years, the country further widened its lead. According to MinerMetrics, the United States accounts for approximately 40% of the total computing power of the first cryptocurrency’s network.
In February, Bitcoin miners set a record for electricity consumption in a month — 19.6 GW.