Joe Biden’s latest budget proposal calls for a 30% tax on cryptocurrency mining

The American President Joe Biden has proposed a variety of crypto-related taxes and regulations that he says could generate nearly $10 billion next year and more than $42 billion over the next decade, according to his 2025 proposal. budget released on Monday. Among the proposals are an excise tax on Bitcoin mining.

Any business using computing resources to operate digital assets would be subject to an excise tax equal to 30% of the cost of the electricity used, the proposal states. The proposed tax would take effect after December 31, 2024, and would be phased in in three phases: 10% in the first year, 20% in the second year, and 30% in the third year.

“The budget saves billions of dollars by closing other tax loopholes that overwhelmingly benefit the wealthy and the largest, most profitable companies,” including “closing a loophole that benefits wealthy crypto investors,” continues the proposition.

If this measure were implemented, miners would have to report the amount and type of electricity they use, as well as the amount they paid if they purchased it from an external source. Meanwhile, miners who rent computing power – as is often the case in so-called mining pools – would be required to report the value of the electricity from the company that rented it to them . The value would then serve as a tax base.

Critics of the proposals include Republican Sen. Cynthia Lummis, who has expressed opposition to the tax proposal. on X. Although the inclusion of crypto in the budget suggests the administration may be bullish on crypto, a 30% tax would destroy the mining industry’s presence in the United States, she said. tweeted.

Bitcoin mining is a growing business in the United States since the Chinese Communist Party banned miners from operating in China in May 2021. The industry has taken off in Texas, thanks in part to the state’s cheap electricity. Riding Bitcoin’s tailwind during this bull run, shares of eleven publicly traded U.S. mining companies have soared over the past year, with CleanSpark ($CLSK) up 270% over the past six month, according to CoinGecko data.

The story continues

Meanwhile, Dave Rodman, a crypto attorney and founder of the Rodman Law Group, also expressed frustration with the proposals. He told Fortune via email: “I find it truly laughable that ‘wealthy crypto investors’ are included in the list of oligarchs in this statement… The government recognizes the economic power that Web3 will wield, but they are focused on suppressing it while extracting it from it.”

Biden’s call for a mining tax comes as part of a proposed budget, which many view as more of a wish list or political statement, since new tax measures must come from the House of Representatives. American representatives, which is currently controlled by Republicans hostile to its program. .

This is not the first time the Biden administration has sought to curb mining operations. Biden proposed the same tax last March in his 2024 budget proposal and recently pressured miners to reveal the extent of energy use through a mandatory emergency survey, but he has been forced to retract it last month, following a legal backlash.

According to the first estimates published by the Ministry of Energy last month, the industry could represent between 0.6% and 2.3% of total annual electricity consumption in the United States. For context, last year Utah consumed approximately 0.8%and Washington state, home to nearly 8 million people, consumed 2.3%. In Texas, Bitcoin mining has already increased electricity costs for non-mining Texans by $1.8 billion a year, or 4.7%, according to Mackenzie Wood.

Other proposals that would affect cryptocurrencies include guidelines for applying sell-at-a-loss rules to digital assets, reporting requirements for financial institutions and digital asset dealers, and new rules for reporting foreign crypto accounts, including cryptocurrencies in mark-to-market rules.

This story was originally featured on Fortune.com

Fuente