The White House Council on Economic Activities (CEA) is looking to sanction the crypto mining sector stating that high energy consumption by crypto miners has spillover effects on the environment and quality of life.
In a major move, the Biden administration is looking to heavily tax crypto mining activities that take place in the United States. On Tuesday, May 2nd, the White House Council on Economic Activities (CEA) argued about the harms cryptocurrency mining is causing to society.
After China banned cryptocurrency mining activities in 2021, the US has seen a strong influx of crypto miners settling in crypto-friendly jurisdictions like Texas and others. Now, the United States is one of the top destinations that contributes a large percentage to the global cryptocurrency mining activity.
CEA made the case for a US tax equal to 30% of the energy costs incurred by the miner. This comes as an unusual industry-specific penalty that could threaten the profits of such companies. The CEA defines the excise tax status for Digital Asset Mining Energy (DAME). In a blog post that appeared on the White House website on Tuesday, the CEA wrote:
“The high energy consumption of cryptocurrency companies has negative repercussions on the environment, quality of life, and the electricity grids where these companies are located across the country. Currently, cryptocurrency companies do not have to pay the full cost that they impose on others, in the form of local environmental pollution, Rising energy prices, and the climate impacts of growing greenhouse gas emissions.The DAME tax encourages businesses to start taking better account of the damage to society.”
Earlier this year in March 2023, the Biden administration proposed an excise tax published by the US Treasury. This “green book” outlines management’s proposal and priorities for revenue generation over the next year. According to estimates, this proposal could raise billions of dollars in revenue over the next decade.
Cryptocurrency industry players are revolting against the measures
Critics of the proposed tax note that the crypto mining industry is unfairly targeted. Speaking to Yahoo News, Tom Mapes, director of energy policy at the Chamber of Digital Commerce, He said:
This puts a clear line in the sand that they don’t like the industry. They are looking for ways to disable it. This is just a way to go after the industry they don’t support.”
On the other hand, Republicans in Congress have resisted efforts by the administration and regulators to sanction the crypto sector. There is a greater possibility that the Republican-controlled House of Representatives may not adopt taxes that would penalize the industry.
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Bhushan is a financial technology enthusiast with a good knack for understanding financial markets. His interest in economics and finance has turned his attention towards the new emerging Blockchain technology and Cryptocurrency markets. He is persistent in the learning process and keeps himself motivated by sharing the knowledge gained. In his spare time he reads fantasy and thriller novels and occasionally explores his culinary skills.