US Debt Ceiling Deal Halts 30% Bitcoin Mining Tax: Congressman

May. 31, 2023
US Debt Ceiling Deal Halts 30% Bitcoin Mining Tax: Congressman

The United States debt ceiling negotiations will exempt Bitcoin miners from being taxed for consuming energy. On Sunday, President Joe Biden and House Speaker Kevin McCarthy made their agreement on the U.S. debt ceiling public.

A notable aspect of the deal seems to have prevented certain taxes put forth by the Biden administration. One of these taxes is the Digital Asset Mining Energy (DAME) excise tax. Biden and McCarthy excluded this tax from the agreement.

The Biden administration has proposed a measure that, if approved, will enforce a 30% tax on cryptocurrency mining companies. This initiative minimizes crypto mining operations’ environmental and social impact by minimizing their detrimental effects.

Pierre Rochard, the V.P. of Research at Riot Platforms, questioned the proposed DAME excise tax’s coverage of Bitcoin mining. The “Fiscal Responsibility 5 Act of 2023” bill did not mention it explicitly.

U.S. Congressman Warren Davidson (R-OH-08) tweeted about stopping the tax implementation. He considered it a victory in preventing the proposed taxes from being implemented.

The comprehensive 99-page bill, intended to suspend the nation’s debt limit until 2025, is undergoing intense scrutiny and debates within Congress. Its purpose is to avoid a federal default and, at the same time, impose limitations on government spending.

The Proposed Digital Asset Mining Energy (DAME) Tax

The idea of introducing an energy tax was first introduced in March of this year. The proposed tax, Digital Asset Mining Energy (DAME), applies universally. There are Proof-of-Work (PoW) networks like Bitcoin and Proof-of-Stake (PoS) networks like Ethereum.

The tax accounts for the substantial differences in their energy consumption. It is a crucial consideration while debating the DAME tax. According to the suggested tax framework, individuals mining digital assets must provide specific details.

This includes reporting the quantity of electricity they utilize, the origin of that electricity (whether it originates from renewable sources or not), and its corresponding worth. This obligation would also encompass off-grid power generation, which involves using unused natural gas.

The Biden administration reiterated imposing financial constraints on miners in a report released by the White House. This measure benefits both American towns and the environment. The proposal, however, faced criticism from crypto advocates.

Bitcoin mining consumes energy like video games, but there’s no call to ban gaming,” tweeted Robert F. Kennedy Jr., a Democratic presidential candidate. He argued that the environmental argument is a selective pretext to suppress anything challenging elite power structures.

During the Bitcoin 2023 conference, Republican Senator Cynthia Lummis strongly criticized the proposal. She emphasized the importance of a robust Bitcoin mining sector for national and energy security.

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Senator Lummis urges Bitcoin enthusiasts to collaborate with organizations promoting the integration of the top cryptocurrency in America’s economy. Simultaneously, she firmly believes that the suggested energy tax will not come to fruition.

Rida Fatima

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An ardent wordsmith with a rich five-year background in delving into the realms of finance and cryptocurrencies. Alongside curating captivating blogs, Unique's talents extend to crafting imaginative and engaging content.