US President Joe Biden’s administration is proposing a tax on cryptocurrency mining, citing the industry’s negative impact on the environment. The tax, called the Digital Asset Mining Energy (DAME) excise tax, aims to make crypto companies accountable for their environmental impact, with the tax coming into effect after a phase-in period.
The tax would be equal to 30% of the cost of electricity used for mining, with the Council of Economic Advisers stating that crypto mining 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.”
It has been met with opposition from the crypto community, who argue that it is unfair and does not incentivize the use of clean energy. Riot Platforms VP of Research Pierre Rochard criticized the timing of the proposal, saying it was “the worst moment imaginable for the White House to be drawing attention” to Bitcoin. He also criticized the current state of the global financial system and the banking system.
The environment for cryptocurrency mining is also changing, with states like North Carolina discussing enforcing a moratorium on crypto mining, while Texas recently removed mining-related incentives.
However, the US is not alone in its regulatory approach towards crypto. Lawmakers around the world are also wanting to establish a regulatory rulebook for crypto firms, with China implementing a ban on crypto mining way before, while Japan and Singapore both are increasing regulation of the industry.
According to reports, the US Securities and Exchange Commission is also expected to ramp up its regulation of the cryptocurrency industry, with SEC Chairman Gary Gensler calling for more investor protection in the sector. The Biden administration is also reportedly considering a new regulatory approach towards stablecoins, with concerns that they could pose a systemic risk to the financial system. As the regulatory landscape for crypto continues to evolve, the industry will need to adapt and find ways to minimize its environmental impact while also navigating increasing regulatory scrutiny.