Following the details of the agreement reached between President Joe Biden and House Speaker Kevin McCarthy on the U.S. debt ceiling that was made public Sunday, a segment of it sparked talks of the much-publicized crypto mining tax. Sources reveal that a part of the agreement appears to have blocked the mining tax.
The debt ceiling agreement, which is still subject to scrutiny and debates in Congress, comes in the form of a comprehensive 99-page bill. It aims at suspending the nation’s debt limit until 2025, thereby preventing a federal default, while simultaneously imposing restrictions on government spending.
Reportedly, one notable part of the deal is that both leaders have blocked some taxes proposed by the Biden administration including the much-criticized Digital Asset Mining Energy (DAME) excise tax, which proposes a 30% mining tax.
Notably, on Monday, Pierre Rochard, vice president of Research at Riot Platforms, in a tweet, questioned whether “the Administration’s DAME excise tax proposal is gone?” given that Bitcoin mining wasn’t mentioned in the text of the bill, dubbed the “Fiscal Responsibility 5 Act of 2023.” To which Congressman Warren Davidson (Republican-Ohio) responded:
Yes, one of the victories is blocking proposed taxes.
If passed, it would impose a 30% tax on cryptocurrency mining firms, a move that the Biden administration argued was required to limit the environmental and societal damage caused by crypto mining operations.
As stated, the tax would be equal to 30% of the cost of electricity used for mining. The tax would be implemented next year and phased in gradually over three years at a rate of 10 percent a year to then reach the target 30% rate by the end of 2026.
However, Biden’s proposal wasn’t quite welcomed by the lawmakers given the constant criticism it has been receiving. Contrary to the usual political divide between the lawmakers of both sides, the mining tax has been criticized by some Republicans as well as Democrats.
Firstly, Robert F. Kennedy Jr., a Democrat lawmaker and presidential hopeful, rejected the idea of a mining tax and claimed it “requires an invasive surveillance apparatus to monitor what is happening in individual computers” and sets a bad precedent.
He also called it a bad idea and countered the concerns of energy consumption by saying that proposals for controls on cryptocurrencies and crypto mining have a political connection.
Simultaneously, Republican lawmakers vowed to not let the tax get approved and harm the industry. Senator Cynthia Lummis (Republican, Wyoming) called it a pity move to pick between winners and losers and expressed her determination to not let it tax the digital assets industry out of existence.
Notably, the American states have also been largely divided in their views of crypto regulation and mining activities with states like New York and North Carolina appearing to be stricter than others. While North Carolina is discussing enforcing a moratorium on crypto mining, states like Mississippi and Monata are proceeding with mining-favoring legislative bills. Nonetheless, if the tax is shelved in the US, it marks a remarkable step in the favor of the industry.