The White House has released a report justifying a proposed 30% excise tax on cryptocurrency mining firms, asserting that this action would be in the best interest of American communities and the environment. The report states that firms currently do not bear the full cost of the...
The White House has released a report justifying a proposed 30% excise tax on cryptocurrency mining firms, asserting that this action would be in the best interest of American communities and the environment. The report states that firms currently do not bear the full cost of the negative impact they impose on society and that the proposed tax would encourage better accountability for these consequences.
The proposed tax, introduced in the White House’s 2024 budget in March, is expected to help the government reduce its deficit by $74 million in the first year, potentially increasing to $444 million by the fiscal year 2033.
The Digital Asset Mining Energy (DAME) tax would affect digital asset miners beginning in 2024, with firms paying a tax based on their associated electricity costs—starting at 10% and rising annually until it reaches 30%.
Energy consumption comparison
The report estimates that crypto miners in the U.S. used around 50,000-gigawatt hours of electricity in 2022, predominantly for Bitcoin and Ethereum. This energy consumption is almost as much as televisions and significantly more than home computers. The proposed tax would require digital asset miners to disclose their electricity usage, source, and associated value, even for off-grid power generation.
Critics of the proposed tax, such as a16z’s Head of Policy Brian Quintenz, have taken issue with its focus on electricity rather than carbon emissions. Quintenz expressed his concern on Twitter, arguing that the government would penalize certain energy uses regardless of their source.
In addition to environmental concerns, the administration’s report argues that digital asset mining disproportionately impacts communities of color due to pollution and increased renewable energy costs.
The report also contends that crypto-mining lacks the local and national economic benefits typically associated with businesses that use similar amounts of electricity.
Following the release of the White House report, Democratic presidential candidate Robert F. Kennedy Jr. criticized the administration’s rationale, positioning himself as a proponent of digital assets. On Twitter, Kennedy Jr. compared Bitcoin mining’s energy consumption to that of video games, arguing that the environmental argument is a selective pretext to suppress anything that threatens established power structures.