US Scraps Excise Tax Proposal on Bitcoin Mining After Biden Refuses to Slash Crypto Taxes
The US has come to a decision regarding the imposition of excise taxes on Bitcoin miners operating from within the country. The US will not be adding any new tax layer upon the US' Bitcoin mining sector as the proposal extended earlier this month has officially been scrapped. The development was confirmed to the media by a regulator in the US. It is noteworthy, that this decision comes immediately after US President Joe Biden clearly refused to slash the existing taxes on crypto gains. It seems, not levying an excise tax on Bitcoin miners is the US' way to keep earning from crypto taxes while also not pressurising the industry from all sides.
Earlier this month, the US' Council of Economic Advisors (CEA) floated a proposal to have Bitcoin miners pay a tax equal to 30 percent of the total energy cost that they consumed in the crypto mining process.
The decision to pull the plug on this proposal could be part of a bunch of tax-related rebates introduced by the US administration as it finalised to raise the inflation-ridden nation's debt ceiling by two years, a report by CryptoPotato said.CoinsSwitch Ventures Says It's Investing in 12 Web3 Startups in India
For now, however, Bitcoin mining businesses remain protected from any new taxes. Bitcoin mining is an energy intensive process, that requires miners to solve a series of complex algorithms on advanced computers, that need to be always connected to the power source. Miners solve these algorithms to validate transactions on the Bitcoin blockchain, and earn rewards in return.
Often, areas surrounding Bitcoin mining hotspots face a shortage in electricity supply, leading to frequent power outages and causing major inconvenience to neighbouring residents.
The US authorities, previously, have said that even if clean energy is used to facilitate crypto mining, it slashes the availability of clean energy for others, increasing their reliance on electricity produced by fossil fuels while also making that energy more expensive.Binance Set to Launch New Crypto Exchange in Japan: Heres What We Know
In the backdrop of these issues and the environmental deterioration caused by the BTC mining process are reasons that nudged the idea of having Bitcoin miners compensate financially.
Submitting the proposal to tax Bitcoin miners, the CEA had said that an estimated $3.5 billion (roughly Rs. 28,639 crore) could be added to the US Treasury in the next decade via this Digital Asset Mining Energy (DAME) excise tax.
Had it been passed; it would have made running a crypto mining business extra costly and that could have dented the US' current reputation of being a safe haven for crypto miners after China shut its doors to crypto activities.
As of July 2021, 35.4 percent of Bitcoin miners were operating out of the US, the Cambridge Centre for Alternative Finance had revealed last year. That's a 428 percent increase from September 2020, making US the biggest home for crypto miners.
American states of New York, Texas, Georgia, and Kentucky have emerged as popular hosts of crypto miners, CNBC had reported last year citing data from Foundry USA.
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Wednesday, May 31, 2023 at 4:33 am