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The Biden administration has intensified its efforts to implement a 30% Digital Asset Mining Energy (DAME) tax on cryptocurrency miners, as part of initiatives aimed at reducing the sector’s purported effects on climate change.
The suggested tax on crypto mining was initially revealed on March 9 within President Joe Biden’s FY2024 budget proposal and aims to introduce a gradually implemented 30% excise tax on the electricity consumed by crypto miners.
Today the CEA released a blog highlighting a new tax in the President’s budget, the Digital Asset Mining Excise Tax (“DAME Tax”), a tax equal to 30 percent of the cost of the electricity cryptominers use once fully phased in. 1/ https://t.co/944x0wVVB5
— Council of Economic Advisers (@WhiteHouseCEA) May 2, 2023
“An excise tax on electricity usage by digital asset miners could reduce mining activity along with its associated environmental impacts and other harms,” the Department of Treasury stated at that time. Bitcoin (BTC) dropped below $20,000 just a day later.
Nonetheless, a statement from the White House’s Council of Economic Advisers (CEA) on May 2 has reignited discussion around the proposal, attempting to rationalize the necessity for the new tax.
“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 CEA noted.
#Bitcoin mining is good for the grid and good for the environment, yet Biden wants to tax it 30% and send this valuable industry into the hands of Russia.
— Dennis Porter (@Dennis_Porter_) May 2, 2023
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“The DAME tax encourages firms to start taking better account of the harms they impose on society,” it continued, adding:
“While crypto assets are virtual, the energy consumption tied to their computationally intensive production is very real and imposes very real costs.”
The blog also mentioned reports indicating that crypto mining has “negative spillovers” on the environment, quality of life, and electricity grids, and that pollution from electricity generation disproportionately affects low-income neighborhoods and communities of color, while increasing electricity costs for consumers.
Related: Biden budget proposes 30% tax on crypto mining electricity usage
It further suggested that crypto mining utilizing existing clean energy sources (such as hydropower) can still adversely affect the environment by driving other electricity consumers to rely on “dirtier” energy sources.
Screenshot of CEA's thread on the environmental impact of crypto mining. Source: Twitter
The Twitter thread shared by the Council of Economic Advisers has drawn significant backlash from the community, with some labeling it as “misinformation” and “propaganda,” while one user contended that such a tax would “simply push Bitcoin mining to Russia & other countries.”
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