On Tuesday the White House’s Council of Economic Advisors (CEA) discussed that a Digital Asset Mining Energy (DAME) excise tax should be imposed. The announcement reads;
“After a phase-in period, firms would face a tax equal to 30 percent of the cost of the electricity they use in cryptomining.
Currently, cryptomining firms do not have to pay for the full cost they impose on others, in the form of local environmental pollution, higher energy prices, and the impacts of increased greenhouse gas emissions on the climate.
While crypto assets are virtual, the energy consumption tied to their computationally intensive production is very real and imposes very real costs.”
The CEA’s announcement suggests that crypto mining, even when using clean power, adversely affects the climate as other people using electricity are forced to use dirtier sources. Although the bill targets the negative effects on the environment, it doesn’t state how this would protect the environment other than paying their share of energy use.
See Related: Biden’s Administration Outlines Roadmap to Mitigate Crypto Risks
Limiting Mining Moves It Elsewhere
When China banned cryptocurrency mining in 2019, which hosted 3/4 of all Bitcoin mining, a steep drop of 38% in mining activity was witnessed. Although, a 20% increase only months later meant that equipment was relocated elsewhere where these limitations don’t exist.
See Related: Economist Huang Yiping Urges China To Re-Evaluate Its Cryptocurrency Ban
If an unpleasant environment surrounding crypto mining is established in the United States, then this activity may relocate. Currently, the United States is the largest country for crypto mining activity. In relation to this, the CEA stated that; “To ensure that cryptomining is not simply pushed from one local community to another, a national policy is needed.”
As one user on Twitter named Scott Wolfe said; “This tax would be prejudicial and would be overturned by Courts. It would also simply push Bitcoin mining to Russia & other countries. [United States] would lose economic advantage and ability to influence energy sources used. Fossil fuel use would [increase] and climate crisis would accelerate.”
