The White House’s Council of Economic Advisers has proposed taxing cryptocurrency miners to pay for the costs that are inflicted on the environment and local communities. In a blog post published on Tuesday, the council noted that the electricity used in crypto-mining was similar to what is used to power all of the country’s home computers or residential lighting. The usage of crypto-mining was more than computers, clothes washers, and dishwashers among US homes, according to a chart within the post.
Biden Administration’s Proposed Digital Asset Mining Energy Excise Tax
The Biden Administration proposed the Digital Asset Mining Energy excise tax, or DAME, in its budget for fiscal year 2024 in March. Under this proposal, firms will be required to pay a tax equal to 30% of the cost of the electricity used. The tax will be implemented next year and phased in gradually over a period of three years at a rate of 10% a year to then reach the target 30% rate by the end of 2026. This tax is intended to encourage firms to take better account of the harms they impose on society.
The Council of Economic Advisers’ Views on Cryptomining Firms
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. The Council of Economic Advisers noted that the DAME tax encourages firms to start taking better account of the harms they impose on society. Pollution from generating electricity falls disproportionately on low-income neighborhoods and communities of color, the council said.
Republican Lawmakers’ View on the Tax Proposal
Congress would have to bring up the tax proposal since it has the sole authority to enact legislation. However, it may be unlikely given that Republicans have control over the House of Representatives. Many Republican lawmakers have been unfriendly to tighter restrictions on crypto while cheering on innovation in the sector. Some, including former White House Communications Director Anthony Scaramucci, took to Twitter to criticize the tax. The former U.S. Commodity Futures Trading Commission’s Brian Quintenz argued against the administration’s views on how electricity is used.