The administration of US President Joe Biden also plans to levy a levy on professional cryptocurrency miners as part of its 2024 budget. After a three-year introductory phase, such companies should finally be charged a tax of 30 percent on the electricity costs incurred for operating the mining hardware. Prospecting companies that obtain their electricity outside the power grid, for example because they operate their own power plant, are also being asked to pay. You would then have to pay 30 percent of the estimated cost of the electricity consumed.
A White House blog post this week justified this by citing the economic and environmental costs of cryptocurrency mining. For example, mining companies would not currently pay for the consequences that they imposed on others through their operations. These include local pollution and increased greenhouse gas emissions.
50 billion kilowatt hours for US miners
Furthermore, the intensive and often fluctuating power consumption of cryptominers could drive up electricity prices for consumers and put a strain on local power grids, which could ultimately lead to supply disruptions. The US authorities estimate the power consumption of US mining companies in 2022 at around 50 billion kilowatt hours. This is below the consumption for all TV sets in the country, but above that for all home computers.
Miners who get their electricity from renewable sources such as hydropower also find no mercy in the eyes of the Biden administration. Because they would use clean electricity, which would then no longer be available for other purposes. And that would also drive up electricity prices and increase dependence on fossil fuels.
Furthermore, the settlement of miner companies did not come with the economic advantages that other companies with such consumption otherwise brought with them. The diggers would neither bring significantly more employment, nor would the previous additional tax revenue compensate for the higher electricity costs. It is estimated that the new crypto mining tax could add around $3.5 billion to the government coffers over the course of ten years.
USA leading mining location
Since China took action against the domestic cryptocurrency miners, the USA has blossomed into one of the centers in particular for mining Bitcoin. US states like Texas had tried very hard in the past crypto hype of 2021 to lure the mining companies to them. Numerous prospecting companies went public, some bought power plants or made deals with energy suppliers. The Cambridge Center for Alternative Finance estimates that around 38 percent of the Bitcoin hashrate comes from the US, currently the highest share of any country in the world.
However, the industry also suffered badly in the wake of the cryptocurrency prices crashing last year. Companies like Core Scientific had to file for bankruptcy. Authorities also reacted to the mining boom with restrictions. For example, New York State introduced a two-year moratorium on fossil-fuelled cryptocurrency miners.
The introduction of a national tax would certainly make the USA significantly less attractive as a mining location. Voices from the crypto scene conjured up an exodus of US miners to Russia as a scenario. So far, however, the tax is only a partial proposal in the government’s budget, which still has to pass the US Congress. In one of the two chambers of Congress, the Republicans, the political opponents of the Biden government, have the majority.