Joe Biden’s latest budget proposal calls for a 30% tax on crypto mining

Joe Biden unveiled plans for a cryptocurrency mining tax in his 2025 budget proposal. Jason Bergman—Bloomberg/Getty Images

US President Joe Biden has touted an array of crypto-related taxes and regulations that he says could generate nearly $10 billion next year, and more than $42 billion over the next decade, according to his proposed 2025 budget released Monday. Among the proposals is an excise tax on Bitcoin mining.

Any firm using computing resources to mine digital assets would be subject to an excise tax equal to 30% of the cost of electricity used, the proposal said. The proposed tax will take effect after 31 December 2024 and will be introduced in three phases: 10% in the first year, 20% in the second year and 30% in the third year.

“The budget saves billions of dollars by closing other tax loopholes that overwhelmingly benefit the wealthy and the largest, most profitable corporations,” including “closing a loophole that benefits wealthy crypto investors,” the proposal continued.

If implemented, miners would have to report the amount and type of electricity they use, as well as how much they paid if they bought it from an external source. Meanwhile, miners who rent computing power—as is common in so-called mining pools—will be obligated to report the value of the electricity from the company that leased it to them. The value will then serve as the tax base.

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Biden administration proposes a 30% tax on electricity used by #bitcoin miners, even if you’re off the grid with your own solar and wind generation. All the reasons they provide are pretextual, their real reason is that they want to suppress Bitcoin and start a CBDC. pic.twitter.com/juNHvO2NBx

— Pierre Rochard (@BitcoinPierre) March 12, 2024

Critics of the proposals include Republican Senator Cynthia Lummis, who has voiced opposition to the tax proposal on X. While the inclusion of crypto on the budget suggests the administration may be bullish on crypto, a 30% tax would destroy the mining industry’s presence in the US, she tweeted.

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The White House 2025 budget is incredibly bullish on crypto assets, some might even say they believe it’s going to the moon.🚀

But a proposed 30% punitive tax on digital asset mining would destroy any foothold the industry has in America.

— Senator Cynthia Lummis (@SenLummis) March 11, 2024

Bitcoin mining is a growing business in the US since the Chinese Communist Party banned miners operating in China in May 2021. The industry has taken off in Texas, largely thanks to the state’s cheap power. With Bitcoin’s tailwinds this bull run, shares in the eleven publicly traded US miners have soared over the past year, with CleanSpark ($CLSK) up 270% over the past six months, according to CoinGecko data.

Meanwhile, Dave Rodman, crypto attorney and founder of The Rodman Law Group, also expressed frustration with the proposals. He told Fortune via email: “I find it truly laughable that “wealthy crypto-investors” were included in the laundry list of the oligarch-level class in that statement… The government recognizes the economic power that web3 will wield, but they focus on suppressing it while withdrawing from it.”

Biden’s call for a mining tax came as part of a proposed budget, which looks much more like a wish list or a political statement, as new revenue measures must emerge in the US House of Representatives, which is currently controlled by Republicans hostile to his agenda. .

This is not the first time the Biden administration has tried to limit mining operations. Biden introduced the same tax in his 2024 budget proposal last March, and recently pressured miners to disclose the extent of power consumed with an emergency shutdown, mandatory shutdown, but was forced to withdraw it last month, after legal kickback.

According to initial estimates published by the Department of Energy last month, the industry could account for between 0.6% and 2.3% of total annual US electricity consumption. For context, last year Utah consumed about 0.8%, and Washington state, home to nearly 8 million people, consumed 2.3%. In Texas, Bitcoin mining has already increased electricity costs for non-mining Texans by $1.8 billion a year, or 4.7%, according to Wood Mackenzie.

Further proposals that will affect crypto include line items for the application of wash sale rules to digital assets, reporting requirements for financial institutions and digital asset brokers and new foreign crypto account reporting rules, including crypto in mark-to-market rules.