The President’s new budget proposal for Fiscal Year 2024 includes the Digital Asset Mining Energy (DAME) excise tax, which would require bitcoin mining firms to pay 30% of the cost of electricity used for mining crypto assets. This tax aims to address what the White House claims are the economic and environmental costs of mining, citing local pollution, increased greenhouse gas emissions and higher energy prices.
Unfortunately, the proposal does not take into account the large mix of renewable energy sources being used to power bitcoin mining, which Bitcoin Mining Council research shows continues to grow, making up more than half of the energy utilized by miners. In addition, it does not consider the grid-strengthening benefits that Bitcoin mining can offer, which has been seen in states like Texas.
The recent announcement of the DAME tax is yet another example of government overreach and intervention in the private sector. The proposal is just another tax grab by the government, disguised as an effort to address environmental concerns.
While it is true that mining consumes energy, it is not the responsibility of the government to dictate how businesses operate or what is a good and bad use of energy. The government should not be punishing businesses for pursuing innovation and technological advancement. The DAME tax is nothing more than a blatant attempt to stifle innovation in the Bitcoin industry and limit the potential for economic growth.
Furthermore, the government’s claim that Bitcoin mining imposes costs on others is unfounded. Bitcoin mining firms already pay for the electricity they use, and any negative externalities are mitigated by the fact that they often locate in areas with excess or renewable energy. The argument that mining firms impose costs on low-income neighborhoods and communities of color is simply fearmongering and lacks any empirical evidence.
In fact, the DAME tax could have negative consequences for these same communities. The tax could cause firms to move their operations overseas, resulting in job losses and decreased economic activity in the United States. Moreover, the tax could create risks for local electrical grids who now benefit from the increased production and instant shut-off ability of miners.
It is clear that the government is targeting the mining industry because it is a new and innovative technology that is disrupting traditional financial systems.
The DAME tax is a misguided attempt by the government to stifle innovation in the Bitcoin industry and generate revenue under the guise of environmental protection. The tax is hypocritical, lacks any empirical evidence and could have negative unintended consequences for communities and consumers. The government should focus on creating a regulatory environment that supports innovation and economic growth, rather than imposing arbitrary taxes on businesses.