For bitcoin miners, there’s no shortage of reasons to widen their embrace of renewable energy. Among those are bolstering sustainability credentials and potentially keeping regulators off their proverbial backs.
On the latter note, another impetus for crypto miners to increase the use of green energy comes in the form of the Biden administration proposing a 30% climate-related tax on these miners. Specifically, that levy would apply to the crypto mining industry’s use of traditional energy sources. It’s expected to appear in the president’s next budget proposal.
“The Digital Asset Mining Energy (DAME) excise tax, is an example of the President’s commitment to addressing both long-standing national challenges as well as emerging risks – in this case, the economic and environmental costs of current practices for mining crypto assets (cryptomining, for short). After a phase-in period, firms would face a tax equal to 30 percent of the cost of the electricity they use in cryptomining,” according to a blog post by the president’s Council of Economic Advisers (CEA).
Owing to the fact that DAME amounts to a new tax, it must be ratified by Congress. There are no guarantees of that happening, as Republicans control the House and Democrats possess a narrow Senate majority. However, if DAME were to gain bipartisan support, that could be ominous for bitcoin miners.
The reasoning is simple: Crypto miners’ profitability is highly tethered to the prices of the digital assets they mine. That is to say, the industry likely doesn’t want to encounter external headwinds to profitability, particularly those that are avoidable. There are good reasons for the industry to consider going green, including the point that the facts suggest that’s a reasonable course of action.
Citing the New York Times, the CEA noted that “the scale of the power consumption associated with 34 of the largest cryptomining operations, which they calculated as equal to the power used by the surrounding 3 million homes.”
Crypto miners might want to pay close attention to progress on DAME because the White House appears to be taking its cues on the issue from other countries, including Canada and China. Likewise, DAME is designed to prevent crypto miners from simply shifting operations from one location to another in a bid to find more accommodating energy policy. In other words, the objective of the proposal is national, not regional. The CEA estimated that if the act is implemented, it could generate $3.5 billion in government receipts over a decade.
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