To mitigate the purportedly negative effects of the cryptocurrency mining business on the environment, Joe Biden’s administration has rekindled its support for imposing a 30% digital asset mining energy (DAME) tax on cryptocurrency miners.
The announcement was made for the first time on March 9 as part of President Joe Biden’s proposed budget for the fiscal year 2024. The cryptocurrency mining tax proposes implementing a phased-in 30% excise tax on the power that cryptocurrency miners consume.
The blog post, published on May 2 by the Council of Economic Advisers (CEA) of the White House, has garnered significant criticism from community members.
The blog cites that cryptocurrency mining has “negative spillovers” on the environment, life’s quality, and electricity grids. According to the research findings, low-income areas and communities of color bear a disproportionate amount of the harmful effects of pollution caused by the production of power, which also contributes to an increase in the cost of electricity for customers.
It also argues that crypto mining utilizing existing clean power (such as hydropower) might still have a detrimental effect on the environment by encouraging other energy users to switch to “dirtier” sources of electricity. This is because the increased demand for electricity drives up the price of all forms of electricity.
Watchdogs: taxation could fix this
According to the Department of Treasury, an excise tax on electricity usage by digital asset miners could reduce mining activity along with its associated environmental impacts and other harms, a statement which saw bitcoin plummet under $20,000 only a day later.
Later, a statement by the Council of Economic Advisers (CEA) of the White House also pushed the plan back into the spotlight to explain the need for the new tax.
According to CEA, crypto mining firms are not required to cater to the cost they impose on others. This price shows up as more pollution in the immediate area, higher energy bills, and the repercussions of increased greenhouse gas emissions on the global climate.
The Twitter thread released by the CEA has drawn considerable criticism from the community. Some have called it misinformation and propaganda, while another Twitter user stated that such a tax would “simply push bitcoin mining to Russia & other countries.”