"Instead, the energy is used to generate digital assets whose broader social benefits have yet to materialize."
Death, Taxes, Crypto
The White House is proposing a 30 percent tax on crypto mining operations, to better reflect the effects they're having on the environment.
The "Digital Asset Mining Energy (DAME) excise tax" is meant to address the "economic and environmental costs of current practices for mining crypto assets," according to a new White House statement. "After a phase-in period, firms would face a tax equal to 30 percent of the cost of the electricity they use in crypto mining."
It's a notable move to address growing concerns over the considerable environmental footprint of crypto operations, which often draw from polluting sources of electricity — and the latest regulatory move to cast a shadow on the formerly red-hot digital currencies.
According to a 2022 report by the White House Office of Science and Technology Policy (WHOSTP), crypto mining used between 120 and 240 billion kilowatt-hours per year, more than the electricity usage of an entire country.
In the US alone, the WHOSTP estimates crypto consumes up to a staggering 1.7 percent of total electricity usage, the equivalent of all home computers or residential lighting, and between 0.4 and 0.8 percent of total US greenhouse gas emissions.
And on an infrastructure level, the New York Times reported last month that dozens of Bitcoin mines across the country are putting immense pressure on the power grid and raising electricity prices for nearby residents, despite them having nothing to do with crypto.
"Cryptomining does not generate the local and national economic benefits typically associated with businesses using similar amounts of electricity," the White House wrote. "Instead, the energy is used to generate digital assets whose broader social benefits have yet to materialize."
Unsurprisingly, the news of a possible tax was met with outrage by the crypto community.
"So, apparently it doesn’t matter where the electricity comes from — coal, gas, 100 percent renewable, etc." tweeted head of policy at A16z Crypto Brian Quintenz. "If the government doesn’t like how you use the energy, you’ll be penalized."
In short, plans to tax crypto mining in the US will likely face plenty of opposition.
With analysts predicting that 2022's crypto winter could soon be over, the topic will be more relevant than ever as crypto miners could soon be looking for ways to re-enter the market.
More on crypto mining: Mining Crypto Is Even Worse for the Environment Than We Thought
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