Boosting Clean Energy: White House Advisers Advocate for 30% Tax on Digital Mining to Curb Environmental Impact

Biden Administration Renews Push for 30% Digital Mining Energy Tax

The White House’s Council of Economic Advisers (CEA) recently posted a blog on May 2 that has sparked controversy in the cryptocurrency community. The post announced that the Biden administration has renewed its efforts to impose a 30% Digital Asset Mining Energy (DAME) tax on cryptocurrency miners as part of its initiative to reduce the industry’s alleged impact on climate change.

The Proposed DAME Tax

The Biden administration first introduced the proposed crypto-mining tax on March 9 as part of the FY2024 budget. The tax seeks to impose a phased-in 30% excise tax on electricity used by crypto-miners. The Department of Treasury has stated that such a tax could reduce mining activity, along with its associated environmental impacts and other harms.

However, the proposal faced strong opposition from the community. The value of Bitcoin plummeted under $20,000 just a day after the tax was announced.

The Need for the DAME Tax

In its May 2 statement, the CEA justified the need for the DAME tax. According to the CEA, cryptomining firms currently do not pay for the full costs they impose on society, including local environmental pollution, higher energy prices, and the impacts of increased greenhouse gas emissions on the climate. The DAME tax aims to encourage firms to take better account of the harms they cause.

The CEA also cited reports suggesting that crypto mining has negative spillovers on the environment, quality of life, and electricity grids. Furthermore, pollution from electricity generation falls disproportionately on low-income neighborhoods and communities of color while increasing the cost of electricity for consumers.

The CEA also mentioned that crypto mining using clean power, such as hydropower, can still have a negative impact on the environment. Such mining can push other electricity users to dirtier sources of electricity.

Criticism of the DAME Tax

The Council of Economic Advisers’ Twitter thread has attracted widespread criticism from the community. Many have called it “misinformation” and “propaganda.” One Twitter user argued that the tax would simply push Bitcoin mining to other countries, such as Russia.