Biden Administration Proposes 30% Tax on Crypto Mining to Combat Environmental Impact

The Council of Economic Advisers has proposed a new tax on cryptocurrency mining called the Digital Asset Mining Energy (DAME) excise tax. The tax, equal to 30% of the cost of electricity used, is an attempt to address the negative environmental impact associated with crypto mining. The CEA argues that mining firms do not currently pay the full cost of the pollution and greenhouse gas emissions generated by their operations. The tax would be phased in after a period of time.

The move comes amid growing concerns about the environmental impact of cryptocurrency mining. A recent New York Times article highlighted the impact of 34 mining operations, sparking criticism from the crypto industry. However, critics of the proposed tax say that it is unfair and does not incentivize the use of clean energy. Some have also pointed out that other industries are also culpable of environmental damage.

The crypto mining industry has grown in the US since China banned crypto mining. Bitcoin mining stocks have also outperformed tech stocks in 2023, with Core Scientific being the biggest gainer. However, there is pushback against the industry in some states. North Carolina recently discussed a moratorium on crypto mining, while Texas removed mining-related incentives.

Critics of the tax proposal argue that it unfairly targets the crypto industry and fails to address the broader issue of environmental damage. Others have called for a more comprehensive approach that takes into account the impact of other industries.

Despite the controversy, the DAME tax proposal reflects growing concerns about the environmental impact of cryptocurrency mining. As the industry continues to grow, it is likely that there will be increasing pressure to address these concerns and develop more sustainable practices.