Biden’s 30% tax is not welcomed by crypto industry

[Cryptocrit]

Biden administration proposed DAME tax on Tuesday, which would charge Bitcoin miners a 30 % tax on the cost of the electricity, but crypto industries are not happy with this proposal, have shared negative opinion against this decision.

The Bitcoin mining community is facing a new challenge that could change its future in the United States. The White House has proposed a tax called the Digital Asset Mining Energy (DAME) tax, which would make it more expensive for companies to mine Bitcoin and other digital currencies.

On Tuesday, this proposal was brought back into the spotlight as part of the government’s budget plan for the next fiscal year. The DAME tax would charge Bitcoin miners a 30% tax on the cost of the electricity they use. This tax would be introduced gradually: starting at 10% in the first year, then increasing to 20% in the second year, and finally reaching 30% in the third year.

Read full article here
https://www.cryptocrit.xyz/2024/04/DAME-tax-in-USA.html

[joniboini]

Isn't this old news? I tried to find articles from different websites, but most are 2 months old. The most popular articles are dated in 2023. Is there any change in this plan compared to when it was initially proposed? It doesn't seem like there are any notable changes, if any. A recent article suggests there's a new plan called EIA mining survey or something[1]. I wonder why they are so aggressive with crypto. Maybe because in my country the tax is so low, I find it difficult to understand how they arrive at the 30% figure.

[1] https://www.eurasiareview.com/14042024-biden-redoubles-effort-to-crush-crypto-with-eias-mining-survey/

[yhiaali3]

Isn't this old news? I tried to find articles from different websites, but most are 2 months old. The most popular articles are dated in 2023. Is there any change in this plan compared to when it was initially proposed?

I don't know, but it seems to be on April 13, as the article says. It may have been an old plan, but it was recently revived.

In any case, this is an indication of the wrong policy that the United States is pursuing against Bitcoin and the crypto industry in general. As I recall, the United States occupies first or second place in the mining industry, and this additional tax of 30% on electricity consumption will cause many mining companies to migrate outside the United States. To get cheaper electricity.

I do not know what is the benefit of such stupid policies that cause important economic resources to flee from the United States to other countries.

[Captain Corporate]

To be fair it is not really that much of a smart idea to get money out of crypto miners because it would mean that if they become not so profitable, they would end up stopping, so why would they do it. This isn't some way that government could make money, because it would mean that miners would have to make profit even after the tax, and very few could, and that means there won't be that much money to be made. I believe that the best way to go would be just making sure that we are talking about a bigger deal and revenue based, not how much they spend on electricity, would be smarter to keep it that way.

[NotATether]

To be fair it is not really that much of a smart idea to get money out of crypto miners because it would mean that if they become not so profitable, they would end up stopping, so why would they do it. This isn't some way that government could make money, because it would mean that miners would have to make profit even after the tax, and very few could, and that means there won't be that much money to be made. I believe that the best way to go would be just making sure that we are talking about a bigger deal and revenue based, not how much they spend on electricity, would be smarter to keep it that way.

The US government is not known for making smart rules.

It is not only with bitcoin but with a lot of other laws that they have screwed up as well in recent times, but since those are not relevant I will only discuss the crypto related ones.

So this "tax" is just going to make is less profitable to mine BTC, and it comes at exactly the worst possible time when we are days before the halving. It means there will be a short-term dropoff of hashpower as miners shut down their rigs due to no profit.

[Charles-Tim]

Isn't this old news? I tried to find articles from different websites, but most are 2 months old. The most popular articles are dated in 2023.

It began with a survey of the electricity that miners are using. That was last year. But this news is not old but new. When we read the news last year, we know that US is planning something against US bitcoin miners.

So this "tax" is just going to make is less profitable to mine BTC, and it comes at exactly the worst possible time when we are days before the halving. It means there will be a short-term dropoff of hashpower as miners shut down their rigs due to no profit.

Are miners not taxed at all before in USA? I think if they were taxed, at least it would be up to 10%. According to the news, the tax will be 10% in the first year, 20% in the second year and 30% starting from the third year. If they are taxed before but which I do not know, 10% for the first year should not be a problem for the miners.

[Zed0X]

It's supposed to impose excise tax based on the electricity consumption. It's understood that it will be based on energy from the power grid but it looks like even miners who use solar, wind, and other green energy are also covered in the proposal. That's just weird.

[ABCbits]

Isn't this old news? I tried to find articles from different websites, but most are 2 months old. The most popular articles are dated in 2023. Is there any change in this plan compared to when it was initially proposed? It doesn't seem like there are any notable changes, if any. A recent article suggests there's a new plan called EIA mining survey or something[1]. I wonder why they are so aggressive with crypto. Maybe because in my country the tax is so low, I find it difficult to understand how they arrive at the 30% figure.

[1] https://www.eurasiareview.com/14042024-biden-redoubles-effort-to-crush-crypto-with-eias-mining-survey/

The proposal isn't new. But recent news (which created about 2 months ago) actually talks about the prposal is pushed again by U.S. government. Although, response by mining company shown on OP's news isn't new either. I found https://www.dlnews.com/articles/regulation/bidens-dame-tax-could-destroy-bitcoin-mining-in-us/ cite statement from same source about this proposal which created last month.

[TomPluz]

The real reason for this hefty tax proposal is the very idea that Bitcoin mining is not good for the environment and must be discouraged to grow and should be phased out of the country slowly. Now, of course, Bitcoin mining is business and if an operator could not make good money then the business would be looking somewhere else and I am sure that there will be smaller countries that can welcome miners with open arms like El Salvador or Paraguay, for that matter. The whole Biden administration and its allies in both legislative chambers are not so friendly to the cryptocurrency industry and they are using hefty tax as the best way to send this message...and if there can be another four more years for Joe Biden then am sure no crypto miner will be left in USA by 2028. the whole cryptocurrency industry must reject this proposal and there must be a compromised formula where all parties can still come out as winners and not as losers.

[robelneo]

This is a bad advice coming from Biden's adviser they underestimated the cryptomining industry and the whole Cryptocurrency industry, 30% is such a huge tax rate, the mining industry in the US will be force to stop their operation.
They Cryptocurrency community will vote against Biden but if Trump will the one to pitted against Biden, Biden could be re elected again.
This move will give other countries an opportunity to venture to Crypto mining because the US miners will force out of business.

[Stompix]

Bitcoin mining is business and if an operator could not make good money then the business would be looking somewhere else and I am sure that there will be smaller countries that can welcome miners with open arms like El Salvador or Paraguay, for that matter.

They can welcome them but they can't substitute the US and lawmakers in the US know that!

For example, Salvador is net importer of energy, and it gets a ton via gas burning, they have a FSRU ship anchored right there for this purpose:
https://lngprime.com/americas/el-salvador-fsru-completes-second-sts-lng-op/54554/

It's a thing of extra capacity available and not many countries can say ok, let's give you 50 TWH of electricity now!

Plus, there is a thing of cheapness, not only do these countries have to have extra energy but also cheap as hell!
Riot and Mara in their SEC forms have stated a price of 2 cents to 4 cents per kwh, those countries would need to offer just as much, and if we exclude a few little ones only Russia and Canada would comply with this!

And from here things get more complicated, the big guys are all listed on the stock exchanges, and that's how they secure financing, how would it look for a company listed on Nasdaq to move operations to Russia? Or Iran? Or China? Or...like half of the globe...
Plus, there is the tax thing, you don't get the same tax breaks as a foreign company in Bolivia, tax rebates, tax deductions on gear, tax deduction on losses, those are far more than 10%, big guys like hut8 or riot are running a constant loss

Pretax Income
$ -597.27M/$ -591.85M/$ -521.30M/$ -15.18M/$ -12.67M/$ -20.45M
Tax Provision
$ -5.09M/$ -5.09M/$ -11.75M/$ 254.00K/$ 0.00/$ -143.00K

A negative tax provision means Riot has paid only one year $254k, but they have claims for 20 million in deductions.

The big miners are trapped in the US, that's clear, they will either deal with the 10% increase, which is not that big, or try to optimize other costs.

For a quick TLDR
It's really really complicated!

Are miners not taxed at all before in USA?

Not if you're not making a profit....
https://www.riotplatforms.com/riot-platforms-reports-full-year-2023-financial-results-current-operational-and-financial-highlights/

[Faisal2202]

On Tuesday, this proposal was brought back into the spotlight as part of the government’s budget plan for the next fiscal year. The DAME tax would charge Bitcoin miners a 30% tax on the cost of the electricity they use. This tax would be introduced gradually: starting at 10% in the first year, then increasing to 20% in the second year, and finally reaching 30% in the third year.

I did read this news before but I did not know the tax would be imposed in phases, well that's at least a good thing, as miners who are mining at bigger rates, might want to move out of the country in order to safe themselves from such a huge tax as 30% is a no way for me at least although I am not a miner. But I wonder if most of the miners even at a lower scale prefer not to use electricity from grids they prefer solar or wind energy.

Because that's cheap, I have seen a lot of videos of big mining farms which are running on wind or solar energy. Do these miners have to pay the tax as well, as our government is also considering imposing the tax on people using solar power to power their houses and shops, I mean why would a country impose such a tax while citizens are not using anything of theirs? That's just absurd. Well, let's see what happens if the presidency changes. 

[Captain Corporate]

I have never seen anyone who said "I would like to get some more taxes because I love paying more and more taxes". Obviously if you put %30 tax on the miners they will hate that and will do whatever they can to make sure that it doesn't happen, thats literally how new taxes work. I am not saying that we are going anything further about it tho, we are going to end up with more taxes to miners and to everyone else, its always going to be something and more taxes, thats how governments work.