Biden is asking Congress to kill the American Bitcoin mining industry


The fact that the United States has taken an aggressive approach to cryptocurrency regulations — despite giving the green light for Bitcoin ETFs — is basically undeniable. This is particularly true of the Bitcoin mining complex, which has a long history dating back to the earliest days of Bitcoin. Nevertheless, the feds seem hellbent on destroying the industry, even though it operates on a cleaner energy grid than you will find in most countries. 

Rather than a business friendly approach or at the very least acknowledging the value brought by a domestic Bitcoin mining industry, the Biden administration in March reintroduced a controversial proposal to impose a 30% excise tax on the cost of electricity used for Bitcoin mining. The draconian proposal is called the Digital Asset Mining Energy tax (DAME), and it could lead American Bitcoin miners — from RIOT Platforms to Marathon Digital Holdings — to flee American soil.

Senator Cynthia Lummis, a Wyoming Republican, noting as much on X, writing, “A proposed 30% punitive tax on digital asset mining would destroy any foothold the industry has in America.”

Related: The Runes protocol will ignite a new season for Bitcoin after the halving

The Biden administration first proposed the DAME tax in May 2023 before it was quickly shot down by lawmakers and industry leaders alike. The administration swept it under the rug that same month. Apparently, they were stashing it for a later date. Biden reintroduced DAME as part of the fiscal 2025 budget proposal, which would take effect on Oct. 1, and claims it would raise $3.5 billion over a decade. (The tax would be phased in from 10% in the first year to 20% in the second year, and 30% by the third year.)

“A 30% tax hike on any specific industry is a blatant attempt by the administration to pick winners and losers,” Wyoming S Cynthia Lummis

The White House said it intended to make “miners pay their fair share of the costs imposed on local communities and the environment.” It didn’t mention that the sector grew from 3.4% of global Bitcoin mining to 37.8 percent in 2022, making the U.S. the world’s largest Bitcoin mining market.

Related: Bitcoin Ordinals proponents should demand a new Bitcoin fork

The administration’s plan of attack, however, could ultimately backfire on the beleaguered president, who enjoys less than 40% approval from voters in most surveys. Certainly, the DAME tax won’t raise much after it kills the entire industry. Less efficient miners could swiftly be put out of business by the tax or pushed to countries with dirtier energy standards and practices. Even clean energy miners could be put out of business before long, stripping the industry of its chance to provide itself capable of environmentally friendly practices after much scrutiny regarding its sustainability.

The end result will be lost jobs and tax revenue. That’s much different than Biden’s empty promise that it will raise more revenue. The administration coincidentally acknowledges that the U.S. Bitcoin mining industry could relocate “to areas with dirtier energy production.”

The White House said in its statement on the DAME tax that Americans should take comfort in the fact that China had banned Bitcoin mining “completely.” Source: White House

Rather than taking a bold leadership that comports with the American spirit, the administration noted that “other countries” have also “increasingly” moved “to restrict crypto asset mining” — pointing to China, of all places, as an example. In light of that comment no one should be surprised if Biden proposes for a total moratorium on mining — particularly if his tax doesn’t pass.

Biden has nuked predictably for American Bitcoin miners and investors. It would be prudent of the administration to solicit some industry feedback before moving ahead with the DAME tax. Crypto advocates represent an informed and active voter bloc — especially in coastal states, some of which include strong Democratic constituencies. Shelving the DAME tax could help Democrats to secure votes that would otherwise go to Robert F. Kennedy, Jr., who has expressed a friendlier approach to Bitcoin than either Biden or former President Trump. That’s to say nothing of the fact that reconsidering the proposal would be in America’s — and the world’s — best interest.

Kadan Stadelmann is guest author for Cointelegraph and chief technology officer for the Komodo Platform. He graduated from the University of Vienna in 2011 with a degree in information technology before attending the Berlin Institute of Technology for technical informatics and scientific computing. He joined the Komodo team in 2016.

This article is for general information purposes and is not intended to be and should not be taken as legal or investment advice. The views, thoughts, and opinions expressed here are the author’s alone and do not necessarily reflect or represent the views and opinions of Cointelegraph.

Source link

Leave a Reply

Your email address will not be published. Required fields are marked *

Previous Post

Ledger Live brings crypto swaps to users via MoonPay partnership

Next Post

Crypto miners face energy refusal, restriction in Canadian provinces

Related Posts