The Biden administration has proposed a 30% levy on the electricity costs associated with crypto mining. The measures are intended to reduce the activity and its environmental impact.
An explainer paper from the US Department of the Treasury, published on March 9th, states that firms using resources – whether owned or rented – will be subject to the excise tax.
One of the few surprises in the Biden budget: a proposed excise tax on electricity consumed in digital asset mining. It phases in over three years at 10% per year, eventually reaching the maximum 30% rate. pic.twitter.com/UPgUdr8CeG
— John Buhl (@jbuhl35) March 9, 2023
The tax will only become effective after the proposal is made, and will be phased in over three years, with the first year’s rate set at 10% and reaching the maximum 30% after three years.
Miners will be required to report on the amount, type, and value of the electricity used. Those who source electricity from off-grid sources will also be required to calculate the costs of any generator used.
Also Read: US Lawmakers Make Fresh Calls for EPA to Collect Crypto Mining Emissions Data
The Treasury Department argued that high energy consumption from mining activities had negative environmental effects, raised prices for those sharing the grid, and posed “uncertainty and risks to local utilities and communities.”
“An excise tax on electricity usage by digital asset miners could reduce mining activity along with its associated environmental impacts and other harms.”
The White House also confirmed reports that it is looking to crack down on a tax strategy that it claims would bring in an extra $24 trillion for crypto transactions.
Under current regulations, crypto investors are able to sell digital assets at a loss to take advantage of tax-loss harvesting and then immediately buy them back. The new rules would bring crypto trading tax regulations in line with those for stocks, and prevent the practice of wash sale rules.
