U.S. President Joe Biden put forward a variety of crypto related taxes and regulations which he says could generate almost $10 billion next year, and over $42 billion over the next decade, according to his proposed 2025 budget released Monday. Among the proposals are an excise tax on Bitcoin mining.
Any firm using computing resources to mine digital assets would be subject to an excise tax equal to 30% of the costs of electricity used, the proposal states. The proposed tax would come into effect after December 31, 2024, and be introduced in three phases: 10% in the first year, 20% in the second year and 30% in the third year.
“The Budget saves billions of dollars by closing other tax loopholes that overwhelmingly benefit the rich and the largest, most profitable corporations,” including “closing a loophole that benefits wealthy crypto investors,” the proposal continued.
If implemented, miners would have to report the amount and type of electricity they use, as well as how much they paid if purchased it from an external source. Meanwhile, miners who lease computing power —as is common in so-called mining pools—would be required to report the value of the electricity of the company that leased it to them. The value would then serve as the tax base.
Biden administration is proposing a 30% tax on electricity used by #bitcoin miners, even if you are off-grid using your own solar and wind generation. All of the reasons they provide are pretextual, their real reason is that they want to suppress Bitcoin and launch a CBDC. pic.twitter.com/juNHvO2NBx
— Pierre Rochard (@BitcoinPierre) March 12, 2024
Critics of the proposals include Republican Senator Cynthia Lummis, who voiced opposition to the tax proposal on X. While the inclusion of crypto on the budget suggests the administration may be bullish on crypto, a 30% tax would destroy the mining industry’s presence in the U.S., she tweeted.
The White House 2025 budget is incredibly bullish on crypto assets, some might even say they believe it’s going to the moon.🚀
— Senator Cynthia Lummis (@SenLummis) March 11, 2024
But a proposed 30% punitive tax on digital asset mining would destroy any foothold the industry has in America.
Bitcoin mining is a growing business in the U.S. since the Chinese Communist Party banned miners operating in China in May 2021. The industry has taken off in Texas especially thanks in part to the state’s cheap power. Riding Bitcoin’s tailwinds this bull run, shares in the eleven publicly-traded U.S. miners have been soaring over the past year, with CleanSpark ($CLSK) up 270% over the past six months, according to CoinGecko data.
Meanwhile, Dave Rodman, crypto lawyer and founder of The Rodman Law Group, also voiced frustration at the proposals. He told Fortune over email “I find it truly laughable that “wealthy crypto investors” are included in the laundry list of the oligarch level class in that statement…The government recognizes the economic power that web3 will wield but they focus on suppressing it while extracting from it.”
Biden’s call for a mining tax came as part of a proposed budget, which many consider more of a wish list or a political statement, since new revenue measures must originate in the U.S. House of Representatives, which is currently controlled by Republicans hostile to his agenda.
This isn’t the first time the Biden administration has sought to curb mining operations. Biden pitched the same tax last March in his 2024 budget proposal, and has recently been pressurizing miners to reveal the extent of power consumed with an emergency, mandatory survey, but was forced to retract it last month, following legal backlash.
According to initial estimates published by the Department of Energy last month, the industry could account for between 0.6% and 2.3% of total annual U.S. electricity use. For context, last year, Utah consumed approximately 0.8%, and Washington state, home to nearly 8 million people, consumed 2.3%. In Texas, Bitcoin mining has already raised electricity costs for non-mining Texans by $1.8 billion per year, or 4.7%, according to Wood Mackenzie.
Further proposals that would affect crypto include line items for applying wash sale rules to digital assets, reporting requirements for financial institutions and digital asset brokers and new foreign crypto account reporting rules, including crypto in mark-to-market rules.