The Biden administration has renewed its push to impose a 30% digital asset mining energy (DAME) tax on cryptocurrency miners, part of efforts to reduce the industry’s impact on climate change.
The proposed crypto-mining tax was first announced on March 9 as part of President Joe Biden’s FY2024 budget and seeks to phase in a 30% excise tax on electricity consumed by crypto-miners.
“An excise tax on electricity use by digital asset miners would reduce mining activity and its associated environmental impacts and other harms,” the Treasury Department wrote at the time. Bitcoin
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However, a May 2 statement by the White House’s Council of Economic Advisers (CEA) brought the proposal back into the limelight in efforts to justify the need for the new tax.
“Currently, in the form of local environmental pollution, higher energy prices, and the impact of increased greenhouse gas emissions on the climate, cryptomining firms do not have to pay the full costs they impose on others,” the CEA wrote.
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“The dam tax encourages companies to better understand the harms they impose on society,” it wrote:
“Although crypto assets are virtual, the energy consumption tied to their computationally intensive production is very real and imposes real costs.”
The blog cited reports that crypto mining has “negative spillovers” on the environment, quality of life and electricity grids, and that pollution from power generation falls on low-income neighborhoods and communities of color, driving up electricity costs for consumers.
RELATED: Biden Budget Proposes 30% Tax on Crypto Mining Electricity Use
It even suggests that crypto mining using existing clean electricity (such as hydropower) could negatively impact the environment by pushing other electricity users to “dirty” electricity sources.
Screenshot of CEA’s thread on the environmental impact of crypto mining. Source: Twitter
The Twitter thread posted by the Council of Economic Advisers has drawn widespread criticism from the community, with some calling it “misinformation” and “propaganda,” while one Twitter user argued that such a tax would “drive bitcoin mining to Russia and other countries.”
