United States crypto miners may face a 30% tax on their electricity costs under a budget proposal by President Joe Biden aimed at reducing mining activity. The proposed tax would be implemented after Dec. 31 and phased in over three years at a rate of 10% a year, reaching the max 30% tax rate by the third year.
The Department of the Treasury has released a supplementary budget explainer paper on the proposed tax, stating that crypto miners would have reporting requirements on the "amount and type of electricity used as well as the value of that electricity." This means that even crypto miners who acquire their electricity needs off-grid would still be subject to the tax and would be required to estimate the electricity costs generated by any "electricity generating plant."
The Treasury explained that the energy consumption of crypto mining operations has negative environmental effects, increases prices for those sharing a grid with the operations, and creates uncertainty and risks to local utilities and communities. The proposed tax would require reporting requirements on the amount and type of electricity used as well as the value of that electricity.
Crypto KOL John Buhl expressed opinion that if the tax is about climate change, it is more reasonable to penalize/tax crypto mining's carbon footprint, not the total energy usage.
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Policy and Regulation