- Govt says mining pollutes the environment and increases greenhouse gas emissions
- The tax could generate revenue of up to $3.5 billion in the next decade
The White House wants to levy a penalty on crypto miners because of the alleged harm they impose on communities, CoinDesk reported, citing a post by the Council of Economic Advisers (CEA).
They propose a tax on firms’ energy costs
The institution wants to enforce a tax of 30% of mining companies’ energy costs. If the proposal is accepted, it might threaten these operations’ profits.
The CEA adds that at the moment, crypto mining companies do not have to pay for higher energy costs, which their operations contribute to, local environmental pollution, and increased greenhouse gas emissions. They stated in the post:
While crypto assets are virtual, the energy consumption tied to their computationally intensive production is very real and imposes very real costs. The amount of electricity used in crypto mining in the United States in 2022 was similar to what is used to power all the country’s home computers or residential lighting.
The tax is exclusive for the crypto industry
According to the CEA, crypto mining does not incur the economic benefits usually associated with businesses using similar amounts of electricity. This is why no companies in other industries will be saddled with the tax, which could generate revenue of up to $3.5 billion in the next decade.
The risks of crypto mining
The CEA added in its post that crypto miners’ high energy consumption was having adverse effects on the quality of life and on electric power grids. They claimed pollution from electric power generation fell disproportionately on communities of color and low-income areas, citing a 2019 study.
Crypto mining operations come with intensive and often unpredictable electricity consumption, which not only leads to electricity price increases, but also strains power grids and causes safety hazards.
The opposition
Republicans have historically opposed the efforts of watchdogs and the administration to punish the crypto sector. The House of Representatives is controlled by the Republicans, making it unlikely to agree to the tax.
