President Joe Biden has reignited the debate surrounding implementing a 30% tax on electricity used by crypto miners in a budget proposal for 2025.
The proposal, outlined in a document titled “General Explanations of the Administration’s Fiscal Year 2025 Revenue Proposals” by the U.S. Department of the Treasury, aims to address the current gap in regulations regarding digital assets.
Under the proposed plan, an excise tax, similar to those imposed on goods such as fuel, would be levied on mining activities involving digital assets.
President Biden’s crypto miners tax would be calculated based on 30% of the electricity costs associated with digital asset mining.
The move would require mining companies to disclose the amount and type of electricity used, with firms purchasing external electricity also required to report its value.
Additionally, miners leasing computational capacity would need to report the value of the electricity provided by the leasing company, which would serve as the tax base.
Critics Voice Concern About the Tax Plan
The administration’s proposal is expected to come into effect for taxable years beginning after December 31, 2024.
The implementation of the tax would be gradual, with rates starting at 10% in the first year, increasing to 20% in the second year, and finally reaching 30% in the third year.
Even mining companies that generate their own electricity or acquire power “off-grid” would be subject to the 30% tax based on estimated electricity costs.
Critics of the proposal, such as Pierre Rochard, the vice president of research at Bitcoin (BTC) mining infrastructure firm Riot Platforms, argue that even those utilizing renewable energy sources like solar or wind power would be adversely affected.
Rochard suggests that the tax may be an attempt to suppress the growth of Bitcoin and pave the way for a central bank digital currency (CBDC) launch.
Senator Lummis Opposes 30% Tax for Crypto Miners
US Senator Cynthia Lummis has also expressed opposition to the tax proposal.
While acknowledging the inclusion of cryptocurrencies in the budget as a potentially positive sign, Lummis said that a 30% tax would undermine the industry’s foothold in the United States.
“A proposed 30% punitive tax on digital asset mining would destroy any foothold the industry has in America,” she wrote on X.
The White House 2025 budget is incredibly bullish on crypto assets, some might even say they believe it’s going to the moon.🚀
But a proposed 30% punitive tax on digital asset mining would destroy any foothold the industry has in America.
— Senator Cynthia Lummis (@SenLummis) March 11, 2024
It is worth noting that this is not the first time the Biden administration has proposed a 30% tax on electricity used by crypto miners as a similar attempt was made in the budget proposal for 2024.
Meanwhile, Biden’s 2025 budget faces an uphill battle as Congressional Republicans stand to oppose the proposal.
“The price tag of President Biden’s proposed budget is yet another glaring reminder of this Administration’s insatiable appetite for reckless spending and the Democrats’ disregard for fiscal responsibility,” a statement released by Speaker of the House Mike Johnson reads.
“Biden’s budget doesn’t just miss the mark – it is a roadmap to accelerate America’s decline.”
My joint statement with @SteveScalise, @GOPMajorityWhip, and @RepStefanik on Biden’s budget proposal: pic.twitter.com/6StD9YAzMe
— Speaker Mike Johnson (@SpeakerJohnson) March 11, 2024