Key Points
- Senator Cynthia Lummis opposes President Joe Biden’s proposed 30% excise tax on Bitcoin miners’ energy consumption.
- Lummis argues that the tax could harm the growing American Bitcoin mining industry and push it to other countries.
Senator Cynthia Lummis has voiced her disagreement with a proposed energy excise tax on Bitcoin miners.
She has published a report titled “Powering Down Progress: Why A Bitcoin Mining Tax Hurts America,” which scrutinizes the proposal by President Joe Biden’s administration to introduce a 30% tax on energy consumed by Bitcoin miners.
The Report’s Arguments
According to Lummis, this tax could potentially dismantle the burgeoning American Bitcoin mining industry, which started to grow after China banned mining.
She suggests that the tax could drive the industry out of the U.S. and into other countries.
The senator argues that the Treasury’s reasons for introducing the tax are based on outdated views about energy use and technology.
She cites the Bitcoin Energy Sustainability and Emissions Tracker as proof that Bitcoin mining is cleaner than commonly thought, with up to 52.6% of BTC mining possibly being emissions-free.
Lummis also highlights the increasing role of Bitcoin mining facilities in ensuring energy system security.
She describes mining operations as large, dynamic electrical loads that can balance and redistribute energy across electrical networks as required.
The senator criticizes the proposal as a poorly thought-out policy that could harm the very goals it aims to achieve.
Bitcoin Mining Tax Proposal
In March, the U.S. Presidential Administration proposed a 30% excise tax on electricity used for mining cryptocurrencies like Bitcoin.
The proposal justified the increased energy consumption for extracting digital assets by stating that it harms the environment and boosts energy prices.
The tax is expected to be introduced gradually, starting at 10% in 2025, then 20% the following year, and eventually reaching 30%.
In May 2023, the Council of Economic Advisers under the Biden administration proposed including a 30% tax on miners’ electricity use in the federal budget.
The proposal was met with backlash from large American mining companies, which saw it as an attempt to marginalize the cryptocurrency community and push crypto businesses out of the country.
According to the Energy Information Agency (EIA), crypto miners accounted for between 0.6% and 2.3% of all U.S. energy consumption last year, roughly equivalent to the energy consumption of the entire state of Utah.
If the proposed tax law is abandoned again, the mining industry in the United States could experience significant growth.
This could be strategic for the United States, allowing it to maintain a leading position in the digital economy and attract high-tech investment globally.
