- The Biden administration revived on Tuesday a proposal to tax Bitcoin miners on their electricity consumption.
- Industry leaders say the move would force miners to relocate outside the US.
- The tax could also prove detrimental to US interests, miners say.
The Bitcoin mining industry is in an uproar after the White House reintroduced on Tuesday a controversial proposal for a tax on mining.
The Digital Asset Mining Energy tax, called DAME tax for short, would subject digital asset miners to a 30% excise tax on their electricity costs.
It could force Bitcoin miners to relocate outside the US.
“Implementing a blanket 30% federal tax on digital mining will certainly kill the sector and wipe out billions of dollars of investor value virtually immediately in the United States,” Taras Kulyk, CEO of SunnySide Digital, a mining hardware provider, told DL News.
“A proposed 30% punitive tax on digital asset mining would destroy any foothold the industry has in America,” Senator Cynthia Lummis, a Republican from Wyoming and one of the most pro-crypto legislators in Congress, posted on X.
The DAME tax was initially proposed by the Biden administration last May to help shore up the government’s budget for fiscal 2024. But it met fierce opposition from lawmakers and industry leaders alike, and was dropped that same month.
The proposal was revived, however, as part of the budget proposal for fiscal 2025, which starts on October 1.
If implemented as proposed, the tax would be phased in over a period of three years — 10% the first year, 20% the second year, and 30% the third. The White House projected in 2023 that it would raise $3.5 billion in revenue over a decade.
“The primary goal of the DAME tax is to start having crypto miners pay their fair share of the costs imposed on local communities and the environment,” the White House stated at the time it originally proposed the tax.
Consequences
The Bitcoin mining industry, however, says the tax threatens the viability of mining operations in the US.
“If passed, this move would cause many less efficient miners to become uneconomic,” Rob Chang, CEO of Gryphon Digital Mining, told DL News. “Which would cause them to decide to move to other, less expensive locales.”
In other words, Bitcoin miners would flock to friendlier jurisdictions — just as they did after China banned crypto in 2021.
That would ultimately defeat the purpose of the tax because little revenue would be collected, Brian Morgenstern, head of public policy at Riot Platforms, one of the largest Bitcoin mining companies in the US, wrote on X.
It could also prove detrimental to US interests.
The tax “would put clean energy projects out of business and push [miners] to dirtier grids, causing an increase in emissions,” effectively worsening the industry’s carbon footprint, Morgenstern said.
It would also “ensure that miners overseas capture the revenue in this space instead of American companies… which would further increase the value of Bitcoin vis-à-vis the dollar,” he added.
Lee Bratcher, president of the Texas Blockchain Council, told DL News that he doesn’t expect the tax proposal to remain in the federal budget.
Tom Carreras is a markets correspondent for DL News. Got a tip about Bitcoin mining? Reach out at tcarreras@dlnews.com