Biden wants to increase taxes for crypto miners to 30 percent
2 min readThe US financial regulator Securities and Exchange Commission (SEC) has declared war on the crypto space. Cryptocurrencies are declared securities, exchanges are banned, deals are banned and tougher rules are introduced. In short: The USA is putting a stop to its reputation as the “wild crypto west”. The US crackdown was preceded by the FTX crash, a wake-up call that made it impossible to continue. But startled by the bankruptcy of the fraudulent crypto exchange, the US regulators now appear to be over-correcting.
Now government led by President Joe Biden is planning large-scale tax increases. In the future, billionaires will have to give up at least 25 percent and the capital gains tax will be increased from a maximum of 20 to almost 40 percent. Crypto investors are also affected by these increases. Now, crypto mining companies are also being targeted.
USA vs. crypto: Bitcoin miners should pay
Because, as the crypto portal Cointelegraph reports, the Biden government wants the electricity used for crypto mining tax at 30 percent to reduce mining activities. Not all at once, but 10 percent spread over three years. The tax increase would still put a heavy damper on the US-based mining industry. Initially, Twitter user John Buhl had this to say about it reported who noticed the proposal in the Biden cabinet budget.
One of the few surprises in the Biden budget. A proposed excise tax on electricity usage from crypto mining. Phasing in at 10% in year one and climbing to 30%. pic.twitter.com/UPgUdr8CeG
— John Buhl (@jbuhl35) March 9, 2023
Specifically, the letter from the United States Treasury Department states: “Any company that uses its own or rented computing resources to mine digital assets would be subject to an excise tax equal to 30 percent of the cost of electricity used to mine digital assets.” (Page 71 of the official document, PDF). And not just on electricity purchased, but also on electricity generated by the mining companies themselves: “Companies that generate or purchase electricity off-grid, e.g. B. by using the power of a specific power generation facility, would be subject to an excise tax of 30 percent of the estimated cost of electricity. The main reasons for the tax increase are the environmental impact of crypto mining, rising electricity costs for other users of the network and the overloading of the electricity networks used by the companies.
The proposal is to apply from 2024. However, because US President Joe Biden does not currently hold the two chambers of Congress, but the Republicans form the majority in the House of Representatives, it is considered unlikely that the budget plan will be implemented in its current form.
What is certain, however, is that a de facto mining ban, which would be tantamount to such a drastic tax increase, would properly rearrange the global mining market – after all, the USA is currently involved 37.84 percent by far the largest share of the Bitcoin hash rate.
