Bittime - The fact that the United States has taken an aggressive approach to cryptocurrency regulation despite giving the green light to Bitcoin ETFs cannot be denied. This is especially true for the Bitcoin mining complex, which has a long history dating back to Bitcoin's inception.
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However, the government seems determined to destroy the industry, even though its operations use a cleaner energy grid than most countries.
Biden Reintroduces Controversial Proposal
Instead of taking a business-friendly approach or at least recognizing the value brought by the domestic Bitcoin mining industry, the Biden administration in March reintroduced a controversial proposal to impose an export tax of 30% on the cost of electricity used for Bitcoin mining.
This draconian proposal is called a Digital Asset Mining Energy tax (DAME), and could make American Bitcoin miners from RIOT Platforms to Marathon Digital Holdings leave American soil.
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DAME Tax
Senator Cynthia Lummis, a Republican from Wyoming, warned of that in X, writing, "The proposed 30% punitive tax on digital asset mining would destroy every foothold the industry has in America."
The Biden administration first proposed a DAME tax in May 2023 before it was quickly rejected by legislators and industry leaders. The administration saves it in the same month. Apparently, they were saving it for future use.
Biden reintroduced DAME as part of his fiscal 2025 budget proposal, which will take effect on October 1, and claimed that it would raise $3.5 billion over ten years. (This tax will be applied gradually from 10% in the first year to 20% in the second year, and 30% in the third year.)
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Tax Increase
The White House says the goal is to make "miners pay their share of the costs imposed on local communities and the environment." They don't mention that the sector is growing from 3.4% of global Bitcoin mining to 37.8 percent by 2022, making the US the largest Bitcoin mining market in the world.
"A 30% tax increase on certain industries is a clear attempt by the administration to pick winners and losers," wrote Wyoming Sen. Cynthia Lummis in X.
The administration's attack plan, however, could ultimately return to the shackled president, who has received less than 40% approval from voters in most surveys. Of course, a DAME tax wouldn't do much after killing an entire industry.
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Less Efficient Miners
Less efficient miners could quickly go bankrupt due to taxes or be forced to move to countries with dirtier energy standards and practices. Even clean energy miners can go bankrupt in a short time, robbing the industry of the opportunity to provide environmentally friendly practices after much debate about its sustainability.
The result will be a loss of jobs and tax revenues. That's a far cry from Biden's empty promises that it would generate more revenue. The administration happens to be aware that the US Bitcoin mining industry could move “to areas with dirtier energy production.”
In a statement about the DAME tax, the White House said that Americans should be grateful that China has banned Bitcoin mining "completely."
Rather than taking bold leadership in keeping with the American spirit, the administration noted that “other countries” are also “increasingly” moving “to restrict crypto asset mining” pointing to China, of all places, as an example. With those comments no one would be surprised if Biden proposed a total moratorium on mining especially if his tax doesn't pass.
Saving DAME Taxes Could Help Democrats
Biden has knocked it easy for American Bitcoin miners and investors. It would be wise for the administration to seek feedback from industry before moving forward with a DAME tax. Crypto advocates represent an informed and active group of voters primarily in coastal states, some of which include strong Democratic constituencies.
Saving the DAME tax could help Democrats gain votes that would otherwise go to Robert F. Kennedy, Jr., who has demonstrated a friendlier approach to Bitcoin than Biden or former President Trump.That's not to mention the fact that reconsidering the proposal would be in America's and the world's best interests.
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DISCLAIMER: This article is informational in nature and is not an offer or invitation to sell or buy any crypto assets. Trading crypto assets is a high-risk activity. Crypto asset prices are volatile, where prices can change significantly from time to time and Bittime is not responsible for changes in fluctuations in crypto asset exchange rates.
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