Is Biden’s Controversial Bitcoin Mining Tax Dead or Will It Rise From the Ashes?

Is Biden’s Controversial Bitcoin Mining Tax Dead or Will It Rise From the Ashes?

Bitcoin (BTC) miners in the United States can breathe a sigh of relief after a proposed tax on crypto mining fails to pass a bill to raise the US debt ceiling due to appear set to succeed.

The Digital Assets Mining Energy (DAME) excise tax proposal sought to charge crypto miners a tax equivalent to 10% of the cost of the electricity they used for mining in 2024, before scaling up to 30% in 2026.

The tax was highly controversial, with critics arguing that it had the potential to increase global emissions as a result of forcing miners to go abroad, where countries may produce more emissions during energy production.

In addition, Bitcoin miners look for cheap energy, and since one of the cheapest sources of energy is excess renewable energy, Bitcoin miners can actually boost its production by providing utilities with a buyer for energy that would otherwise be wasted.

The news broke after Bitcoin miner Riot Platforms vice president of research, Pierre Rochard, noted on May 28 that the proposed bill did not include any mention of the DAME tax, which Rep. Warren Davidson replied was “one of the victories” of the bill was.

Dead and buried or ready to return?

While much of the online discussion surrounding the news suggested the proposal was “dead,” others, such as Coin Metrics co-founder Nic Carter, insisted it was only temporarily defeated, citing the possibility that it could be used in future bills. included.

Carter suggested later in a May 29 Twitter thread that the government would probably try to smuggle it into some omnibus bill and would have already if it had the political currency to do so.

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But bills must be approved by both Congress and the House, and since the Republican party generally opposes tax increases and currently controls the House, it seems unlikely that such an omnibus bill could make it to the president’s desk.

Speaking to Chamber of Digital Commerce founder and CEO Perianne Boring during a fireside talk on May 20 at the Bitcoin 2023 conference in Miami, Senator Cynthia Lummis assured viewers that the DAME tax “will not happen” .

Lummis added that ensuring Bitcoin mining companies stay in the US was important for both national security and energy security, highlighting how Bitcoin mining can both reduce gas flare emissions and help stabilize the energy grid.

Cointelegraph contacted the White House asking if it planned to continue with the DAME tax, but received no response.

Has the damage already been done?

In response to questions from Cointelegraph, Fred Thiel, CEO of Bitcoin miner Marathon Digital Holdings, suggested that whether or not President Joe Biden’s administration decides to continue pursuing the DAME tax, it will continue its anti-crypto agenda, saying:

“I think it’s clear that this government will continue to broadly oppose the crypto sector, and even if this particular tax is no longer on the table, it probably won’t be the last misguided, targeted attempt to bring down this industry. .”

Many from the crypto industry and even some US legislators agree with this approach, arguing that the US government under the guise of ensuring the financial system remains stable and secure.

When companies make long-term decisions, they generally try to reduce risk. So, given the choice to operate in a region with clear, crypto-friendly policies compared to a region where regulations are unclear, and there is a greater potential for policies that hurt the competitiveness of US-based operations, companies generally choose the former.

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Thiel highlighted how the actions of the US government and regulators weigh on business decisions as he spoke to Cointelegraph, saying, “Regardless of the likelihood of passing the DAME tax, Marathon has already begun to diversify the locations of our operations. “

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Thiel added that “because regulations around mining are so vague”, his company has made the strategic decision not to concentrate its footprint in the US, but to diversify its activities.

He pointed to a May 9 announcement from his company that said it would build two new mining facilities in Abu Dhabi.

Abu Dhabi is a region that has made a concerted effort to attract crypto-related investment through its clear regulations, which have been hailed as pro-market.

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  • June 3, 2023