The US President wants to impose higher taxes on crypto miners and companies, as they otherwise would not generate any benefits for society. The initial proposals involve around 30% taxes.
The government under US President Joe Biden has proposed a new tax aimed at taxing cryptocurrency miners more heavily. This is referred to as a DAME tax. Specifically, it states: “The DAME tax encourages companies to better account for the damage they inflict on society.” The first draft from the White House is titled “The DAME Tax: Crypto Miners Pay for Costs They Impose on Others.”
“Societal benefits of cryptocurrencies are not yet in sight”
What is it exactly about? The acronym DAME stands for Digital Asset Mining Energy, which means “Energy for the mining of digital assets.” in English.
This DAME tax is intended to force companies to pay a tax of 30% on the cost of the electricity they use for mining cryptocurrencies:
The main goal of the DAME tax, which is expected to raise approximately $3.5 billion over a period of 10 years, is for the crypto economy to assume its fair share of the costs imposed on local communities and the environment.
This would massively reduce the profits of such companies in the end and, in the worst-case scenario, could even wipe them out completely.
Some companies are likely to be hardly affected by this, as some crypto miners have already become independent from official electricity providers: They have built their own power plant and sell excess electricity
What is the idea behind it? According to various sources, the aim is to avoid extreme price fluctuations. Because when crypto companies need a lot of electricity, the local authority has to supply it. In other regions, however, the prices for electricity would then rise.
According to the US government, cryptocurrency mining is already the fourth largest consumer of electricity in the USA:
- Number 1 is refrigerators and freezers.
- Number 2 is lighting
- And number 3 is television
The White House also states that it doubts the societal benefits of these currencies:
Apart from these known costs and risks, cryptocurrency mining does not yield the local and national economic benefits typically associated with companies that consume similar amounts of electricity. Instead, the energy is used to generate digital values whose broader societal benefits are not yet in sight.
Also, due to rising electricity prices in the USA, many mining firms are becoming independent of the domestic supplier and are relying on their own energy supply. However, one company has now gone too far and used an old drill hole for its purposes. This made the residents anything but happy:
Company hides crypto mine in old drill hole, driving thousands of innocent people crazy
