bitcoin Miners can breathe a glimpse of relief as the White House plan to aggressively tax the sector seems dead in the waters after a bigger deal between President Biden and top Republicans to prevent the US from defaulting on its debt.
The tax was initially introduced by the White House in early May under an Act proposed law Titled Digital Asset Taxes Act on Mining Energy. Known as the DAME Act, the bill called for a 10% tax on electricity used by bitcoin and other cryptocurrency miners starting in 2024 with that figure rising to 30% by 2026.
While the White House has yet to provide another update on the tax proposal, Republican Congressman Warren Davidson of Ohio said Sunday that the mining tax will not go into effect.
“Yes, one of the wins is the proposed tax block,” Davidson said chirp on Sunday in response to a cryptocurrency executive who noted that the excise tax did not appear in a new bill describing the terms for raising the so-called debt ceiling. The exchange came after Davidson tweeted a link to the bill, reflecting a compromise between the White House and Republican leadership on raising the federal debt limit.
The Treasury Department did not immediately respond to an inquiry luck on the status of the DAME Act, but the legislation appears to have no way forward at the moment because there is another large Republican He said The debt ceiling agreement “blocks Democrats’ demands for new taxes and rejects all of Biden’s proposed $5 trillion in tax increases.”
In its initial proposal, the White House claimed that the DAME Act would have generated $3.5 billion in revenue over ten years.
Cryptocurrency mining has become a high-profile target for environmentalists and Democratic policymakers in recent years, who claim it burns massive amounts of energy unnecessarily while providing few benefits — and in some cases higher electricity bills to consumers — in cities where mining operations take place. Cryptocurrency advocates, in turn, claim that the environmental case against bitcoin mining is exaggerated, and that critics misunderstand the industry, much of which relies on renewable energy in the United States.
While Bitcoin requires significant energy to run, the newer blockchain uses relatively little electricity compared to it because it relies on a different system known as proof of stake. This includes the second most popular cryptocurrency, Ethereum, which adopted proof of stake last fall.
Although the White House plan to tax cryptocurrency mining seems dead for the time being, the debt ceiling deal still faces hurdles and must pass the House and Senate before it can take effect.