Plan for 30% tax on Bitcoin mining appears dead under debt ceiling deal
Bitcoin miners can breathe a sight of relief as a plan by the White House to impose stiff taxes on the sector appears dead in the water following a larger deal between President Biden and senior Republicans to prevent the U.S. from defaulting on its debt.
The tax was initially floated by the White House in early May under a proposed law titled the Digital Assets Mining Energy excise act. Known as the DAME Act, the bill called for a 10% tax on the electricity used by bitcoin and other crypto miners beginning in 2024 with that figure rising to 30% by 2026.
While the White House has yet to provide a further update on the tax proposal, Republican Congressman Warren Davidson of Ohio said on Sunday that the mining tax will not take effect.
“Yes, one of the victories is blocking proposed taxes,” Davidson tweeted on Sunday in response to a crypto executive who noted the excise tax did not appear in a new bill describing the terms to raise the so-called debt ceiling. The exchange came after Davidson tweeted a link to the bill, which reflected a compromise between the White House and Republican leadership over raising the federal debt limit.
The Treasury Department did not immediately respond to an enquiry from Fortune about the status of the DAME Act, but the legislation appears to have no path forward for now given that another senior Republican has said the debt ceiling deal “blocks Democrat demands for new taxes and reject all $5 trillion of Biden’s proposed tax increases.”
In its initial proposal, the White House claimed that the DAME Act would have raised $3.5 billion in revenue over ten years.
Cryptocurrency mining has become a prominent target of environmentalists and Democratic policy makers in recent years, who claim that it needlessly burns vast amounts of energy while providing few benefits—and in some cases higher electricity bills for consumers—in towns where mining operations are based. Crypto advocates, in turn, claim the environmental case against Bitcoin mining is overstated, and that critics misunderstand the industry, much of which is based on renewable energy in the U.S.
While Bitcoin does require considerable energy to operate, newer blockchains use only a relative trickle of electricity in comparison because they rely on a different system known as proof of stake. This includes the second most popular cryptocurrency, Ethereum, which adopted proof of stake last fall.
Even though the White House plan to tax crypto mining appears dead for now, the debt ceiling deal still faces hurdles, and must pass both the House and the Senate before it goes into effect.
