Biden resurrects 30% crypto mining tax in new budget proposal

United States President Joe Biden has revived the idea of a 30% tax on electricity used by crypto miners in his budget proposal for 2025. 

In a U.S. Department of the Treasury document titled “General Explanations of the Administration’s Fiscal Year 2025 Revenue Proposals,” the administration highlighted that current laws do not address digital assets apart from broker and cash transaction reporting. Because of this, the administration wants to impose an excise tax — taxes levied on goods like fuel — on digital asset mining. The Treasury wrote:

Any firm using computing resources, whether owned by the firm or leased from others, to mine digital assets would be subject to an excise tax equal to 30 percent of the costs of electricity used in digital asset mining.

If implemented, crypto mining companies must report the amount and type of electricity they use. In addition, firms must report the value of the electricity used if they purchase it externally. Meanwhile, Miners who lease computational capacity would be mandated to report the value of the electricity of the company that leased them the capacity. The value would then serve as the tax base.

According to the administration, this proposal would be effective for taxable years after Dec. 31, 2024. The government will introduce the tax in three phases: 10% in the first year, 20% in the second year and 30% in the third year.

The tax would also apply to crypto mining firms that generate their own electricity. Companies that produce or acquire power “off-grid” would also need to pay a 30% tax on the estimated costs of their electricity bills.

Pierre Rochard weighs in on the 30% tax on miner electricity. Source: Pierre Rochard on X

Pierre Rochard, vice president of research at Bitcoin mining infrastructure firm Riot Platforms, highlighted that even those using solar or wind power would be affected. Rochard believes this is a ploy to suppress Bitcoin (BTC $71,922) and launch a central bank digital currency (CBDC).

Meanwhile, U.S. Senator Cynthia Lummis voiced opposition to the tax proposal on X. According to Lummis, while the inclusion of crypto on the budget shows that the administration may be bullish on crypto, a 30% tax would destroy the industry’s foothold in the United States.

Lummis on the proposed 30% crypto mining tax. Source: Cynthia Lummis on X

This is not the first time the Biden administration has tried implementing a 30% tax on electricity used by crypto miners. On March 9, 2023, Biden made the same attempt to tax miners in the budget proposal for 2024.