Excise Tax on Crypto Mining Energy Blocked in US Debt Ceiling Deal
On Sunday, it became evident that President Joe Biden and House Speaker Kevin McCarthy had reached a deal to extend Debt Ceiling. This also prevented the implementation of the Digital Asset Mining Energy (DAME) excise tax proposed by the Biden administration.
The environmental and social costs of cryptocurrency mining were cited by the Biden administration as justification for the proposed 30% tax on the industry.
Since Bitcoin mining was not addressed in the text of the act, termed the “Fiscal Responsibility 5 Act of 2023,” Pierre Rochard, Vice President of Research at Riot Platforms, questioned if “the Administration’s DAME excise tax proposal is gone.” Warren Davidson, Republican of Ohio’s 8th congressional district, tweeted, in affirmation.
All Eyes on Further Approval
To avoid a federal default, the debt ceiling agreement is a 99-page bill that imposes expenditure caps and delays the increase in the debt ceiling until 2025. Congress is currently conducting extensive investigations and debating the material.
A tax on energy use was initially mooted in March of this year. Miners of digital assets on both Proof-of-Work (PoW) networks like Bitcoin and Proof-of-Stake (PoS) networks like Ethereum would be subject to the proposed Digital Asset Mining Energy (DAME) tax, despite significant differences in energy use.
In order to comply with the proposed tax system, cryptocurrency miners would have to disclose how much energy they use, how much that electricity is worth, and whether or not it originates from renewable sources.
This regulation would apply to both on-grid and off-grid power generation, including the capture of natural gas that would otherwise be vented into the atmosphere.