United

Komodo

Biden

Bitcoin

Impact

<h2 id="key-points">Key Points</h2>
<ul>
 <li>The US government’s harsh approach to cryptocurrency regulations, particularly Bitcoin mining, is causing concern.</li>
 <li>The Biden administration’s proposal to impose a 30% tax on Bitcoin mining could drive the industry out of the country.</li>
</ul>
<p>The United States’ stringent stance on cryptocurrency regulations is becoming increasingly evident, especially in the context of Bitcoin mining. This sector, which has a rich history dating back to Bitcoin’s inception, is facing significant challenges due to the government’s aggressive regulatory approach. This is despite the fact that it operates on a cleaner energy grid than most nations.</p>
<h2 id="proposed-digital-asset-mining-energy-tax">Proposed Digital Asset Mining Energy Tax</h2>
<p>In March, the Biden administration proposed a controversial 30% excise tax on the electricity used for Bitcoin mining. This proposed tax, known as the Digital Asset Mining Energy tax (DAME), could potentially drive American Bitcoin miners to relocate their operations. Wyoming Republican Senator Cynthia Lummis expressed concerns about this proposal, stating that it could destroy the industry’s foothold in the US.</p>
<p>The DAME tax was first proposed by the Biden administration in May 2023 but was quickly opposed by lawmakers and industry leaders. However, it was reintroduced as part of the fiscal 2025 budget proposal, with the expectation that it would generate $3.5 billion over a decade. The tax would be gradually implemented, starting at 10% in the first year, 20% in the second year, and reaching 30% by the third year.</p>
<h2 id="impact-on-the-bitcoin-mining-industry">Impact on the Bitcoin Mining Industry</h2>
<p>The White House stated that the tax aims to make miners pay their fair share of the costs imposed on local communities and the environment. However, it overlooked the fact that the US Bitcoin mining sector grew from 3.4% of global Bitcoin mining to 37.8% in 2022, making the US the world’s largest Bitcoin mining market.</p>
<p>Critics argue that the administration’s approach could backfire, leading to job losses and reduced tax revenue. Less efficient miners could be driven out of business or forced to relocate to countries with lower environmental standards. This could also impact clean energy miners, potentially eliminating the industry’s opportunity to demonstrate its commitment to environmentally friendly practices.</p>
<p>The administration’s stance also contrasts with other countries’ more restrictive approaches to cryptocurrency mining. The White House pointed to China’s complete ban on Bitcoin mining as an example, suggesting that a total moratorium on mining could be on the cards if the proposed tax fails to pass.</p>
<p>The proposed tax has created uncertainty for American Bitcoin miners and investors. It would be wise for the administration to seek industry feedback before proceeding with the DAME tax. Rethinking the proposal could not only secure votes from crypto advocates but also be in the best interest of the US and the world.</p>
<p>The guest author for this article is Kadan Stadelmann, chief technology officer for the Komodo Platform. He graduated from the University of Vienna in 2011 with a degree in information technology before attending the Berlin Institute of Technology for technical informatics and scientific computing. He joined the Komodo team in 2016.</p>

Biden Calls Congress to Curtail US Bitcoin Mining Operations

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