Biden’s controversial Bitcoin Mining Tax: Is it dead or about to rise again?

Biden’s controversial Bitcoin Mining Tax: Is it dead or about to rise again?

The tax was removed from the U.S. Debt Bill, but it doesn’t necessarily mean that the tax is gone forever.

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The United States’ Bitcoin ( BTC ) miners can now breathe a big sigh after a proposed crypto mining tax was not included in a bill that is expected to be passed .

The Digital Assets Mining Energy tax proposal aimed to charge crypto-miners an excise tax equal to 10% in 2024 of the cost for the electricity used to mine in that year, and then increase to 30% in the following year.

The tax was controversial. Critics argued that it could increase global emissions by forcing miners to move overseas, where countries might produce more emissions when producing energy.

Bitcoin miners also seek cheap energy. As excess renewable energy is one of the cheapest energy sources, Bitcoin mining can actually encourage its production by giving utilities a buyer for wasted energy.

News broke out after Riot Platforms Vice President of Research Pierre Rochard pointed out on May 28th that the proposed bill didn’t include any mention of DAME tax. Representative Warren Davidson responded by saying it was “one victory” for the bill.

Are you dead and buried, or are you about to rise again?

Many online discussions around the news indicated that the proposal was “dead”, but others, like Coin Metrics’ co-founder Nic C Carter, emphasized that it had only been temporarily defeated and hinted at the possibility that it could be included in future bills.

Carter said in a tweet thread on May 29, that the administration was likely to try to sneak the bill into an omnibus and would have already done so if they had the political capital to do so.

It is unlikely that an omnibus tax bill will make it to President Obama’s desk, as it must pass through both Congress and the House. The Republican Party, which controls the House and is generally against tax increases, does not have the support of the majority.

Senator Cynthia Lummis , while speaking with Chamber of Digital Commerce CEO Perianne Boring at a fireside chat on May 20, during the Bitcoin 2023 Conference in Miami assured that the DAME Tax “isn’t happening.”

Lummis said that it was crucial to ensure Bitcoin mining companies remain in the U.S. for national security as well as energy security. He highlighted how Bitcoin mining could both help reduce gas flaring emission and stabilize the energy grid.

Cointelegraph asked the White House if it intended to pursue the DAME tax, but received no response.

Has the damage been done?

Fred Thiel, CEO of Marathon Digital Holdings, a Bitcoin miner, responded to questions by Cointelegraph. He said that the administration, irrespective of whether it continues to pursue the DAME tax or not, will continue to push its anti-crypto agenda.

“It is obvious that the administration will continue to oppose the crypto industry, and even if the specific tax is removed, it’s likely not the end of misguided, focused efforts to bring down this industry.”

This is the view of many in the crypto industry, and even some U.S. legislators. They argue that the U.S. Government, among other things, is making a concerted effort to discourage banks working with crypto firms – aka Choke Point 2.

Businesses generally try to minimize risk when making long-term business decisions. If given the option of choosing a region that has clear crypto-friendly regulations over one with unclear policies, where there is more potential for policies to hurt the competitiveness in the U.S., businesses will choose the first.

Thiel explained to Cointelegraph how U.S. regulators and government actions influence business decisions. “Midway through the DAME tax, Marathon has already started diversifying our locations.”

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Thiel said that his company has decided to diversify operations in order to avoid concentrating its operations in the U.S.

He cited an announcement made by his company on May 9, which stated that it would build two mining facilities at Abu Dhabi.

Abu Dhabi has been making a concerted attempt to attract investment in crypto-related businesses via its transparent regulatory regime. This has been hailed by the market as being pro-market.