Erik Weijers, 21 days ago

Bitcoin mining tax in the USA?

President Biden's new budget proposal for 2024 introduces a Bitcoin mining tax, which would require bitcoin mining firms to pay 30% extra on top of their electricity bill. If approved, this would come close to banning Bitcoin mining in the country. The Bitcoin community reacts furiously: 'completely disingenuous'. 

The tax would be phased in at the end of 2023. The rationale for the proposed tax? Having Bitcoin miners compensate the economic and environmental costs of mining.

Pushing out miners to greener dirtier pastures?

If reinforced, the tax would put enormous pressure on Bitcoin mining in the US. Mining is a worldwide and highly competitive industry that operates on tiny margins. 30% more for electricity would probably put most US miners out of business.

This is why Bitcoiners view the tax as disingenuous. The proposal ignores the fact that Bitcoin mining in the US is over 50% based on green energy sources, higher than any other industry. Also, BTC mining helps subsidize the construction of sustainable energy facilities: it always wants to buy cheap energy, even if households don't (wind energy at night, for example). 

Pushing out mining from the US to other countries won't make global greenhouse emissions go down: on the contrary: miners outside the US use a higher percentage of coal. Hence, the proposal is mostly viewed as a way to make life hard for Bitcoiners in the US.

Should the government determine which uses of energy are good?

Perhaps the most important objection against the proposal is a fundamental one: a government shouldn't decide what are preferred ways of spending energy on. While the tax on the surface looks like a carbon tax, which punishes certain forms of 'dirty' energy production, this proposed tax punishes not the source of the energy production but the usage. 

Should we '...selectively tax uses of electricity, in particular dividing between some uses of computing power, depending on what we as a government think is not worth our energy? That is a very dangerous path to go down'. (According to Troy Cross, Bitcoiner and professor of philosophy and humanities at Reed College) 

Indeed, thinking such a tax through, it resembles a social credit score of certain uses of energy. 'Watching your fifth episode on Netflix for the week? Pay higher electricity costs, as you're not useful for society!'

Do we want to go in that direction? The proposed measure would take the US on that path without even acknowledging it is doing so.

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