The U.S Treasury department has submitted a proposal to implement a 30% excise tax on the cost of powering crypto mining companies and plants.
A provision in the department’s list of tax proposals for the U.S. President’s budget proposal would administer a phased-in excise tax based on the cost of electricity used to mine crypto. The tax will be imposed on all mining firms using “computing resources” to mine cryptocurrencies.
The mining firms will also be required to report how much power they use. The tax would be implemented over the next three years, increasing by 10% yearly.
The provision explicitly intends to lower the overall number of crypto mining companies in the U.S. “The increase in energy consumption attributable to the growth of digital asset mining has negative environmental effects and can have environmental justice implications as well as increase energy prices for those that share an electricity grid with digital asset miners,” according to the document. “Digital asset mining also creates uncertainty and risks to local utilities and communities, as mining activity is highly variable and highly mobile. An excise tax on electricity usage by digital asset miners could reduce mining activity along with its associated environmental impacts and other harms,” the document added.
The House of Representatives and Senate are yet to pass a budget that includes revenue-generating tax rules. The Republican dominant house is unlikely to fully accept the Democratic president’s proposal in its current state. Still, the proposal may forecast Biden’s fiscal priorities as he heads into announcing his candidacy for a second term as U.S President.
Other Crypto Tax Rules On The Way?
U.S. President Joe Biden also revealed the 2024 budget proposal on Thursday, highlighting another bill that would shut a “wash sale” loophole in the tax code. The provision would stop investors from harvesting tax losses by selling their digital assets at a loss on purpose, marking that hit as a loss, and then immediately rebuying the same assets again.
Other provisions Biden’s government looks to amend and propose include fixing 2021’s Infrastructure Investment and Jobs Act’s crypto tax reporting standards, ensuring individuals with foreign financial accounts with over $50,000 in cryptos report their holdings, and market-to-market rules that will include crypto.