Biden Revives 30% Crypto Mining Tax in New Budget Proposal

In the latest financial discourse, President Joe Biden has resurrected the idea of imposing a 30% tax on the electricity consumed by cryptocurrency miners in his proposed budget for the fiscal year 2025. Highlighted in a U.S. Treasury Department document titled “General Explanations of the Administration’s Fiscal Year 2025 Revenue Proposals,” the government underscores that current regulations, barring brokerage and cash transaction reporting, do not address digital assets. Consequently, the administration aims to introduce an excise tax on digital asset mining, equating to 30% of the electricity expenses incurred in the mining process.

This tax initiative, set to be implemented in stages—10% in the first year, escalating to 20% in the second, and reaching 30% by the third year—mandates crypto mining companies to report both the quantity and the source of their electricity consumption. For those utilizing outsourced computational resources, the value of the electricity from the leasing company will serve as the tax base. This proposal is designed to take effect for tax years following December 31, 2024, targeting mining operations that produce or acquire off-grid electricity as well, who will be taxed 30% based on estimated electricity bill costs.

Pierre Rochard, Vice President of Research at Bitcoin mining infrastructure firm Riot Platforms, points out that the tax would even affect those harnessing renewable energy sources like solar or wind, viewing it as a maneuver to suppress Bitcoin and pave the way for a Central Bank Digital Currency (CBDC). Concurrently, U.S. Senator Cynthia Lummis expressed her dissent on X, arguing that while the budget’s inclusion of cryptocurrency indicates a potential governmental optimism towards digital currencies, a 30% tax could obliterate the industry’s standing in the United States.

This isn’t the first time the Biden administration has sought to implement a tax on the electricity used by cryptocurrency miners. A similar effort was made in the 2024 budget proposal on March 9, 2023, signaling the government’s consistent approach to regulating the burgeoning digital currency sector amidst soaring national debt levels, which poses broader implications for the future landscape of cryptocurrency mining and investment within the U.S.