The U.S. government is exploring options to stabilize its economy by bringing more funds into its financial systems. For this, the U.S. government will implement higher taxes, i.e., 30% higher than past, on crypto miners for electricity usage. President Joe Biden proposed this idea during his annual budget speech on March 9. The administration hopes to generate over $24 billion (roughly Rs. 1,96,700 crore) for the U.S. economy by amending policies in the crypto sector.
Crypto mining firms in the U.S. may soon have to pay up to 30% of their total electricity costs in taxes for the energy used during mining operations. This proposal aims to benefit the U.S. Treasury while reducing the negative environmental impacts of energy-intensive crypto-mining activities.
The U.S. Treasury made the following statement.
“Firms engaged in digital asset mining would be required to report the amount and type of electricity used as well as the value of that electricity, if purchased externally. Firms that produce or acquire power off-grid, for example by using the output of a particular electricity generating plant, would be subject to an excise tax equal to 30 percent of estimated electricity costs,”
The proposed excise tax for digital asset mining firms in the U.S. will be implemented gradually over three years. It will start at a rate of 10% in the first year, followed by 20% in the second year, and finally reach 30% after that.
This tax policy aims to ensure that digital asset mining firms contribute their fair share to the U.S. economy. While the gradual implementation may provide some relief for affected companies, it is important to recognize that these taxes are necessary for a sustainable future.
Before 2021, China was considered the prime location for crypto miners. However, since the country banned all crypto activities in September 2021, miners have sought out other favourable locations such as Kazakhstan, Russia, El Salvador, and certain regions within the U.S., including Texas and New York State.
According to researchers from Cambridge, the U.S. was named the world’s largest Bitcoin mining hub in 2021. It was estimated that crypto mining activities in the U.S. accounted for approximately 37 percent of the global hash rate, a metric used to measure the computing power used for mining.
The crypto mining industry has brought new job opportunities to Kentucky, prompting the state to explore cost-effective ways to generate electricity to support this growing sector.
The U.S. government justifies its policy with the following narrative.
“An excise tax on electricity usage by digital asset miners could reduce mining activity along with its associated environmental impacts and other harms. The increase in energy consumption attributable to the growth of digital asset mining has negative environmental effects as well as increase energy prices for those that share an electricity grid with digital asset miners,”
The crypto industry will see this new tax implementation in January 2024.
Next: Digital Asset Mining Energy Excise Tax
US crypto miners might be subject to a 30% tax on electricity usage.
Regardless if it is phased over 3 years, it’s still aimed to reduce mining activity in US.
Of course, it’s all done with the environment in mind 🌎💚
3/8 pic.twitter.com/71YWWsorbH
— Rascal ᵍᵐ ☕️ (@jpegrascal) March 10, 2023
