- The Office of the US President has proposed a 30% tax on electricity used by crypto miners in the country
- The Digital Asset Mining Energy tax would help offset the “harms” that crypto miners “impose on society”
- Critics have said that the tax won’t resolve the issues at heart
US President Joe Biden yesterday unveiled the Digital Asset Mining Energy (DAME) excise tax which would see proof-of-work (PoW) miners face a tax equal to 30% of the cost of the electricity they use in their activities. Biden’s office said that the DAME tax was a way of encouraging crypto mining firms “to start taking better account of the harms they impose on society”, which allegedly include higher energy prices for everyone and environmental damage. However, critics have already suggested that such a tax wouldn’t solve anything, and would instead push Bitcoin mining into regions where there is even less oversight.
Crypto Miners Impose “Harms” on Society
News of the proposed DAME tax arrived yesterday and was greeted with consternation by the crypto industry, not because it was unfair but because the solution does little to address the underlying issues. In the blog post announcing the move, the President’s office laid out the supposed issues associated with (PoW) mining in America:
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 DAME tax encourages firms to start taking better account of the harms they impose on society.
The blog post used a heavily criticised New York Times piece on crypto mining in the US to criticize its energy use and pollution, which handily ignored other huge energy guzzlers such as internet video datacenters and farms, which use magnitudes more energy and produce much more pollution than crypto mining establishments.
It seems, however, that because the “broader social benefits (of cryptocurrencies) have yet to materialize,” it’s better to punish them than tell people not to watch TikTok or eat less meat.
Noted crypto advocate Nic Carter was quick to criticize DAME, saying that it addressed the wrong issues and wouldn’t alleviate the problems that the tax seeks to resolve:
I don’t know why they don’t understand this very simple fact.
Banning mining (this is a de facto ban) in the U.S. won’t cause there to be less BTC mining. It will simply mean that mining occurs elsewhere. Other places with higher carbon-intensity BTC mining.
— nic carter (@nic__carter) May 2, 2023
Despite the undoubted popularity of the bill in some circles, there have already been suggestions that Republicans would veto any such bill, or at least heavily water it down, suggesting that the strong words will likely remain just that, for now at least.