In a move that could reshape the landscape for crypto miners in the United States, President Joe Biden has reintroduced the idea of imposing a 30% tax on electricity consumed by crypto mining operations as part of his budget proposal for 2025.
What the Proposal Entails
Outlined in the U.S. Department of the Treasury document titled “General Explanations of the Administration’s Fiscal Year 2025 Revenue Proposals,” the plan aims to address the current regulatory gap surrounding digital assets. The proposed tax would be akin to an excise tax on goods like fuel, targeting the electricity used in digital asset mining.
Under the proposal, any entity using computing resources for mining digital assets, whether through self-owned or leased equipment, would be subject to the 30% tax on electricity costs associated with the mining process.
Implications for Crypto Miners
If enacted, crypto mining companies and crypto miners would be required to report their electricity usage, including both the amount and source of electricity. This reporting requirement extends to firms leasing computational capacity, which must disclose the value of the electricity provided by the lessor.
The tax would be phased in over three years, starting at 10% in the first year, increasing to 20% in the second year, and reaching the full 30% in the third year.
Critics of the proposal, such as Pierre Rochard, Vice President of Research at Bitcoin mining infrastructure firm Riot Platforms, argue that even environmentally conscious miners utilizing renewable energy sources would not be exempt from the tax burden.
U.S. Senator Cynthia Lummis has voiced opposition to the tax, expressing concern that such a hefty levy could stifle innovation and harm the industry’s growth within the country.
Previous Attempts and Future Outlook
This is not the first time the Biden administration has pursued such a tax measure. A similar proposal was made in the budget plan for 2024, indicating a persistent effort to regulate and tax crypto miners.
As discussions around the budget proposal unfold, stakeholders in the crypto industry will be closely monitoring developments and advocating for policies that foster innovation and growth while addressing regulatory concerns.
