Senator Lummis believes implementing a 30% tax would jeopardize crypto’s growth and presence in the U.S.
United States President Joe Biden has put forward a proposal to revive a 30% tax on crypto mining operations as part of his latest budget. The proposal shows the government’s commitment to regulate crypto space more critically.
In a document from the U.S. Department of the Treasury titled “General Explanation of the Administration’s Fiscal Year 2025 Revenue Proposals,” the Administration pointed out that the existing laws do not address digital assets, which primarily focus on broker and cash transaction reporting.
To address the gap, the Biden Administration seeks to impose an excise tax, similar to a tax on goods like fuel, particularly digital asset mining activities.
The Treasury noted that “any firm using computing resources, whether owned by the firm or leased from others, to mine digital assets would be subject to an excise tax equal to 30 percent of the costs of electricity used in digital asset mining.”
A Theee-Phase Tax Proposal
If approved, the proposal would significantly impact crypto miners. Crypto miners play an essential role in providing security in blockchain networks and verifying transactions by solving complex mathematical puzzles, which requires large computational power and energy.
The tax revival of a 30% tax on crypto mining cancels initial policies and indicates the Administration’s growing concern surrounding crypto activities’ environmental and regulatory implications. Critics have long complained about the ecological effect of crypto mining, which regularly depends on energy-intensive processes powered by fossil fuels.
According to the Biden Administration, the proposal will take effect for taxable years after December 31, 2024. The government plans to introduce the tax in three phases: 10% rate in the first year, 20% increase in the second year, and 30% in the third year
The Administration also added that tax would extend to crypto mining firms that generate electricity internally. Additionally, companies that produce power independently, commonly known as “off-grid: entities, must pay a 30% tax based on estimated electricity usage expenses.
Speaking on the development, Pierre Rochard, the Vice President of Research at Bitcoin-driven infrastructure solution Riot Platforms emphasized that even individuals using solar or wind energy would feel the impact of the proposed tax. Rochard is confident that this move appears to be a strategy to suppress Bitcoin and introduce a central bank digital currency (CBDC).
Congress Deliberates on the Biden’s Proposed Plan
President Biden’s budget plan will pass through deliberations in Congress, where lawmakers will carefully examine the proposal and negotiate potential amendments.
U.S. Senator Cynthia Lummis already expressed her concerns regarding the tax proposal on X. Lummis argued that while the Administration’s acknowledgment of cryptocurrency in the budget shows an optimism towards crypto, implementing a 30% tax would “destroy any foothold the industry has in America.”
Meanwhile, this is the second attempt the Biden administration has made to implement a 30% tax on electricity used by crypto miners. On March 9, 2023, Biden attempted to tax miners in the budget proposal 2024.
