President Joe Biden has reiterated his proposal for a 30% tax on the electricity consumed by cryptocurrency miners in his fiscal year 2025 budget plan. The U.S. Treasury Department outlined this initiative in a document titled “General Note on the Administration’s Fiscal Year 2025 Revenue Proposals,” highlighting the lack of existing legislation addressing digital assets beyond broker-dealer and cash transaction reporting. Consequently, the government aims to impose a consumption tax on digital asset mining, akin to taxes levied on goods such as fuel.
Under the proposed framework, any company utilizing computing resources for digital asset mining, whether through company-owned infrastructure or leased from other entities, would be subject to an excise tax equal to 30% of the electricity cost incurred during mining operations. This tax would require cryptocurrency mining firms to disclose the amount and nature of electricity usage, including reporting the value of electricity acquired from external sources or leased computing power providers, which would serve as the tax base.
The implementation of this proposal is slated to begin for tax years subsequent to December 31, 2024, with tax collection scheduled in three stages: 10% in the first year, 20% in the second, and 30% in the third. The tax applies not only to companies generating their own electricity but also to those sourcing power from alternative, off-grid means. Even cryptocurrency miners utilizing renewable energy sources such as solar or wind would be subject to the tax, according to Pierre Rochard, vice president of research at Bitcoin mining infrastructure company Riot Platforms.
Rochard views this tax proposal as a strategic move aimed at suppressing Bitcoin and promoting the adoption of a central bank digital currency (CBDC). Meanwhile, U.S. Senator Cynthia Lummis has voiced opposition to the tax plan, asserting that while its inclusion of cryptocurrencies in the budget signals bullish sentiment from the government, a 30% tax would severely undermine the industry's presence in the United States. Notably, this isn't the first time the Biden administration has proposed such a tax; a similar attempt was made in Biden's 2024 budget proposal on March 9, 2023.
