Biden Proposes 30% Crypto Mining Tax to Offset Environmental Cost

The White House wants to tax crypto mining to offset the “harm” the practice causes.

The Digital Asset Mining Energy (DAME) excise tax, proposed in President Joe Biden’s budget, would levy a tax on crypto mining firms equal to 30% of the cost of the electricity they use, the White House Council of Economic Advisors (CEA) wrote in a Tuesday (May 2) post on its blog.

“Currently, crypto mining firms do not have to pay for the full cost they impose on others, in the form of local environmental pollution, higher energy prices, and the impacts of increased greenhouse gas emissions on the climate,” the post said.

The CEA argues that — unlike other energy-intensive industries — “crypto mining does not generate the local and national economic benefits typically associated with businesses using similar amounts of electricity.”

And while some cities and states have raised the electricity rates or tried to restrict crypto mining, the CEA argues a national policy is necessary to make sure “cryptomining is not simply pushed from one local community to another.”

In a response published Wednesday (May 3), The Chamber of Digital Commerce called on policymakers to focus less on penalizing crypto miners and more on working with the industry on ways to lower energy consumption while allowing the sector to grow.

“The proposed tax on electricity use by crypto mining companies is not about environmental concerns; rather, it is a misguided attempt to stifle innovation in an industry that uses less than 1% of the United States’ electricity,” the organization said.

The president’s proposal comes amid a battle between U.S. policymakers and the cryptocurrency industry.

That’s according to Blockchain Association CEO Kristin Smith, who said at a conference last week that “we are fighting … we’re going to probably be at war for the next 18 to 20 months.”

Against this backdrop, House Financial Services Committee Chairman Patrick McHenry of North Carolina projected a sector framework bill will pass Congress in the next two months.

“U.S. lawmakers have so far failed to get a comprehensive policy framework relating to crypto and digital assets passed,” PYMNTS wrote earlier this week. “Several draft bills made progress last year before ultimately stalling out.”

Meanwhile, the crypto firm Coinbase responded in kind to allegations and warnings about the legality of its business model from the Securities and Exchange Commission (SEC) in court and in public statements.

The company said it would fight the SEC over many of the agency’s claims that Coinbase’s operations go against existing securities laws and regulations, while trying to convince courts that the SEC does not have the authority to oversee cryptocurrency markets.