The proposal by the US government to tax cryptocurrency mining has sparked widespread attention and discussion. According to the website of the British magazine "New Scientist," the proposal aims to reduce the significant environmental impact of cryptocurrency mining but has also raised concerns and objections from experts and industry insiders.
Cryptocurrency mining involves using computational resources to perform complex calculations to ensure the security and stable operation of blockchain networks. However, this process involves intensive computing and significant power consumption, putting immense pressure on the environment. According to the latest data from the University of Cambridge, the electricity consumption of Bitcoin mining activities accounts for 0.69% of the world's total electricity usage.
The US government estimates that by 2023, up to 2.3% of the national electricity will be consumed by 137 cryptocurrency mining facilities. Meanwhile, electricity costs for residents in Texas have increased by 5%, which is believed to be directly related to the growth in demand caused by cryptocurrency miners.
To address the environmental and energy resource impacts of cryptocurrency mining, US President Joe Biden has reintroduced the idea of imposing a 30% tax on the electricity used for cryptocurrency mining in his 2025 budget proposal. According to documents from the US Department of the Treasury, the government aims to impose a consumption tax on digital asset mining, with the tax rate equivalent to 30% of the electricity costs used in digital asset mining.
If implemented, cryptocurrency mining companies must report the amount and type of electricity they use and report the value of the electricity if they purchase it externally. Meanwhile, miners leasing computing power must report the value of the electricity from the companies they lease their computing power from. This value will serve as the tax base.
According to the government, this proposal will take effect for taxable years after December 31, 2024, and will introduce tax rates in three phases: 10% in the first year, 20% in the second year, and 30% in the third year.
Furthermore, this tax will also apply to cryptocurrency mining companies that produce their own electricity. Companies that produce or obtain "off-grid" electricity will also need to pay a 30% tax on the estimated cost of their electricity.
Industry professionals and experts hold different views on this proposal. Pierre Rochard, Vice President of Riot Platforms, a Bitcoin mining infrastructure company, pointed out that even miners using solar or wind energy would be affected. Rochard believes this is a conspiracy to suppress Bitcoin and introduce central bank digital currencies (CBDCs). Senator Cynthia Lummis of the United States expressed opposition, believing that a 30% tax would destroy the industry's foothold in the United States.
This is not the first time the Biden administration has attempted to impose a 30% tax on the electricity used for cryptocurrency mining. As early as March 9, 2023, Biden attempted to tax miners in his 2024 budget proposal.
In conclusion, the US government's proposal to tax cryptocurrency mining has sparked controversy and discussion both inside and outside the industry. The proposal aims to reduce the environmental and energy resource impacts of cryptocurrency mining but has also raised concerns from industry professionals and experts about its rationale and impact. As this proposal progresses and is further discussed, its final outcome will be widely watched.
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