The Biden administration is seeking to push Congress to pass a 30% climate change tax on cryptocurrency miners as part of its next federal budget. The proposed tax, called the Digital Asset Mining Energy (DAME) excise tax, is aimed at incentivizing mining companies to take better account of the societal harms associated with their operations, including higher energy prices and greenhouse gas emissions.
Why a Tax on Bitcoin Mining?
According to a blog post by the president’s Council of Economic Advisors (CEA), mining firms are not currently paying for the full cost they impose on others, such as environmental pollution and the impacts of greenhouse gas emissions on the climate. The CEA stated that the proposed tax is an example of the administration’s efforts to fight climate change and reduce energy prices.
“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 stated in its post.
The tax would be phased in over three years, starting at 10% in the first year, before rising to 20% and eventually 30% in the following two years. The tax is estimated to generate $3.5 billion in revenue over ten years.
Critics of the Tax
Critics of the proposed tax argue that it unfairly targets specific forms of energy consumption and could hinder the growth of the mining industry. In response to the proposed tax, Tom Mapes, director of energy policy at the Chamber of Digital Commerce, told Yahoo News that “this puts a clear line in the sand that they do not like the industry. They are looking for ways to hamstring it. This is just a way to go after the industry which they do not support.”
Bitcoin mining has been a topic of concern for many left-wing politicians worldwide due to its suspected contribution to climate change through its vast energy consumption. In April 2022, a group of Democrat politicians, including progressives like Alexandria Ocasio Cortez, signed a letter to the Environmental Protection Agency (EPA) to investigate whether mining firms were violating environmental statutes.
However, Bitcoiners responded with their own letter to the agency debunking misconceptions about the environmental impact of Bitcoin mining. The community has generally opposed attempts to regulate the mining industry or change Bitcoin’s code to remove mining from its operations.