The Biden administration recently reintroduced an idea that would impose a 30% tax against all “cryptocurrency miner”. This is a witch hunt based on ideology, targeting a rapidly expanding industry . (See my previous comments .

This move, which is part of ‘s budget proposal, was introduced in March. It contrasts with recent pro-crypto statements made by former President Donald Trump who, just last week, called for the U.S. dominance in the bitcoin mining industry. The crypto mining tax is yet to come into force (or if Trump will follow through on his aggressive crypto policy if elected). However, in recent weeks some have begun to suggest that Biden might be softer on the industry.

Opinion

The implementation of a federal 30% tax on digital assets will destroy the sector in the United States and, very likely, in Canada, as the Canadian federal government closely follows U.S. precedents in regulation.

SunnySide Digital was founded by Taras Kulyk, the CEO and founder of SunnySide Digital.



This type of central planning, which is reminiscent of Stalinism (ironically), goes against the democratic ideals that the White House Administration claims to uphold. They came first for your digital mining, and you did nothing…

Biden’s tax proposal: The fine print

His budget proposal for fiscal year 2025 includes the egregious tax on mining, despite billions of dollars being invested in this sector. This is to address environmental concerns as well as regulate the digital assets mining industry. The tax is proposed to be implemented in three phases, with a 10% rate in the first, 20% in the next, and 30% in the final year. This tax only affects digital mining and not data centers in general.

The administration claims that the tax will help combat the negative environmental effects of cryptocurrency mining. This includes its high energy consumption, and the potential for energy prices to rise in communities that host mining operations. However, research has shown that this is not the case.

Although I am not an attorney, and you should take these arguments with a grain or two of salt, the fact remains that a presidential administration taxing a particular industry’s energy consumption is probably unconstitutional. It’s a new idea.

By targeting a particular industry with a tax on energy consumption, the government may be violating a variety of clauses. These include the Commerce Clause, found in Article I Section 8, Clause 3, of the U.S. Constitution; the Equal Protection Clause, found in 14th Amendment; the Due Process, found in Fifth Amendment of the U.S. Constitution; or the statute of unintended effects.

There are also ethical implications that go beyond potential constitutional overreach. The U.S. founders knew that this type of deception was becoming more common and attempted to stop it through the Constitution.

How to kill a new industry 101

The proposed tax by the Biden administration would place a heavy financial burden on digital mines, making them economically unviable. These companies are already facing intense competition and narrow margins. This tax will only worsen their financial struggles, and could lead to significant investor losses.

Many mining companies would be forced to close or relocate in other countries that have more favorable tax policy, resulting in job losses and reduced activity within the United States.

The proposed tax will also disproportionately impact smaller digital mining operations that may not be able to absorb additional costs, or relocate to another jurisdiction. The proposed tax would create an unfair playing field that favors larger and more established mining companies, stifling innovation and competition in the sector, and increasing centralization of larger operators.

If the goal of this administration is to harm small businesses, suppress innovation, and create a reputation as reducing economic activity within the U.S., they’re on track.

Environmental concerns and ineffectiveness

The Biden administration claims the proposed tax will help address the environmental impact caused by bitcoin mining. This is because it uses a large amount of electricity. This argument ignores the fact many mining operations are already using renewable energy sources, and actively working to reduce carbon footprint.

Bitcoin mining is a proven way to improve grids, reduce energy costs and strengthen local communities.

A tax on energy could actually discourage such efforts and encourage miners to switch to less environmentally friendly power sources overseas. The result will be a mass exodus from the U.S. where renewable energy is most prevalent, to countries like Australia and Canada, where fossil fuels dominate.

90 percent of the carbon dioxide emissions are from countries outside the United States. They would be adding to the problem if they tackled “environmental concerns”, as it is a global issue.

What should the government be doing? Nothing. Let the market rule. Bitcoin miners are like the dung beetles in energy. The majority of bitcoin mining is done by renewable energy sources.

Global Competition

Bitcoin mining is a highly competitive industry, with countries like China, Russia, and Canada all vying to dominate. The proposed tax will undermine the United States’ position in the global race by making the country less attractive for mining operations. This could lead to a loss of talent, investment and technological advances, which would ultimately erode the United States’ position in the digital industry.

After China prohibited bitcoin mining in the year 2021, the industry showed its adaptability and resilience. The ban did not stop bitcoin mining from finding new homes in countries that had more favorable regulations and renewable energy resources. The Bitcoin network can adapt to changes in regulations and is not limited by geography.

The shift towards more sustainable energy sources has also highlighted the potential of bitcoin mining to positively contribute to the global energy transformation.

The tax may also have wider implications for the entire cryptocurrency industry. The Biden administration could inadvertently discourage investment and innovation in the bitcoin mining industry by targeting it. This could have a far-reaching impact on the technological development of the country and its competitiveness.

Mining is not something you can ban, but only yourself.

The Biden administration’s proposed tax would have serious negative effects on the digital economy and the bitcoin industry in the United States. It would also negatively impact its own initiatives.

See also: Bitcoin Miners Push Back on a Warrantless Survey

This would be a major financial burden for mining companies. It would also discourage sustainable mining and reduce the competitiveness of the country on the global market. This kind of measure is closer to what oppressive countries such as China or the USSR were like. It is extremely disheartening for the United States.

We should pay the same attention to this issue as the industry did when it fought against the unconstitutional EIA Survey. You cannot ban Bitcoin mining. Only you can ban yourself.