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The Biden administration has renewed its efforts to introduce a 30 percent Digital Asset Mining Energy (DAME) share for cryptocurrency miners, as part of an effort to minimize the industry’s perceived impact on climate change.
The proposed cryptocurrency mining tax was first announced on March 9 and aims to introduce a phased 30% excise tax on electricity used by cryptocurrency 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 consumption by digital asset miners could reduce mining activities and their associated environmental impact and other harm,” the Treasury Department wrote at the time. Bitcoin (BTC) fell below $20,000 just a day later.
However, a statement by the White House Council of Economic Advisers (CEA) on May 2 again drew attention to the proposal in an attempt to justify the need for a new tax.
“Currently, cryptocurrency mining companies do not have to pay for the full cost they impose on others in the form of local pollution, higher energy prices, and the climate impact of increased greenhouse gas emissions,” writes CEA.
#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
“The DAME tax encourages firms to better consider the harm they cause to society,” he wrote, adding:
“While cryptocurrency assets are virtual, the energy consumption associated with their computationally intensive production is very real and comes at a very real cost.”
The blog also mentions reports that cryptocurrency mining has “negative side effects” on the environment, quality of life, and power grids, and the pollution from power generation is hitting low-income neighborhoods and communities of color, while driving up the cost of electricity for consumers.
Related: Biden Budget Proposes 30% Tax on Electricity Use for Cryptocurrency Mining
This even suggests that cryptocurrency mining using existing clean energy (such as hydropower) may still have a negative impact on the environment, pushing other electricity users towards “dirtier” electricity sources.
A Twitter thread published by the Council of Economic Advisers drew widespread criticism from the community, some called it “disinformation” and “propaganda”, with one Twitter user saying that such a tax would “simply push bitcoin mining into Russia and other countries.”