US crypto firms might soon pay taxes for exorbitant energy use
Biden wants crypto miners to pay their fair share via the DAME tax.
The Biden administration wants cryptocurrency miners to pay up if they intend to continue consuming more electricity than every television in the US combined each year. On Tuesday, the White House announced its 2024 proposed budget featuring the Digital Asset Mining Energy (DAME) tax, which aims to slap a 30 percent surcharge on crypto firms’ power intake.
“Currently, cryptomining 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,” reads the Biden administration’s statement released earlier this week. “The DAME tax encourages firms to start taking better account of the harms they impose on society.”
[Related: Bitcoin’s steep environmental costs go beyond its hunger for energy.]
Recent studies have shown that crypto mining’s extremely high energy costs negatively impact the environment, electricity grids, and quality of life for those living nearby. The pollution generated often disproportionately affects low-income areas and communities of color, while the stress on power infrastructure can also raise consumer prices while straining equipment and endangering the public. Despite these issues, the Biden administration argues that crypto firms offer neither local nor national benefits that often come from other businesses consuming the same amounts of electricity.
“There is little evidence of benefits to local communities in the form of employment or economic opportunity, and research has found that minor increases in local tax revenue are more than offset by increased energy prices for firms and households,” the White House adds.
[Related: Former FTX CEO Sam Bankman-Fried was arrested and charged with fraud.]
Fueled by viral media coverage and big-name endorsements, many cryptocurrencies (particularly its most popular variant, Bitcoin) experienced dramatic speculative runs beginning in late 2020. Following Bitcoin’s all-time high of nearly $69,000 per coin in November 2021, numerous financial scandals hit the industry, most notably the collapse of the cryptocurrency exchange firm FTX and subsequent arrest of its CEO Sam Bankman-Fried on charges of fraud. Since then, values have since plummeted to around $29,000 for 1 BTC at the time of writing.
In March, members of Congress announced the Crypto-Asset Environmental Transparency Act, a bill that would force cryptominers to disclose their annual emissions. “When one year of U.S. Bitcoin mining creates as many carbon emissions as 7.5 million gas-powered cars—we have a problem,” bill co-sponsor Sen. Ed Markey (D-MA) wrote on Twitter at the time. “The crypto industry is growing, but so is the fight for climate justice. We will hold these companies accountable.”
If passed, the Biden administration estimates the DAME tax would raise around $10.5 billion in revenue over the next decade.
