Biden’s administration eyes a 30% tax on crypto mining electricity usage.
Crypto miners in the United States could be faced with a significant hike in tax, which aims to reduce mining activities in the country.
According to the US Treasury Department’s explainer paper (“Greenbook”), the proposed policy would be applicable to any company using computing resources to mine crypto.
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An excerpt from the US Treasury Department's document reads:
Any firm using computing resources, whether owned by the firm or leased from others, to mine digital assets would be subject to an excise tax equal to 30 percent of the costs of electricity used in digital asset mining.
The new tax policy would be gradually implemented over the next three years. The tax will increase by 10% each year beginning December 31st.
The proposed provision would also require all crypto-mining companies, including those that are off-grid, to report the amount, type, and value of the electricity they are using.
The department states that these new policies will reduce crypto-mining activities in the country and their negative environmental impact.
A section of the document released on March 9th reads:
The increase in energy consumption attributable to the growth of digital asset mining has negative environmental effects and can have environmental justice implications as well as increase energy prices for those that share an electricity grid with digital asset miners.
Additionally, the department argues that digital asset mining causes other harms, such as posing risks to local communities and utilities due to its high variability and mobility.
This policy is one of the various crypto tax provisions in President Joe Biden’s proposed budget. Another tax policy communicated in a March 9th statement aims to crack down on crypto wash sales, a strategy used by investors to avoid tax.
It is worth noting that the budget with the new tax rules must be passed by the two legislative chambers in the country for them to be implemented.
