President Joe Biden's budget proposal, which aims to "limit mining activity," might eventually subject cryptocurrency miners in the United States to a 30% tax on electricity bills.
Any company using resources, whether they are owned or rented, would be "subject to an excise tax equal to 30% of the costs of power used in digital asset mining," according to a Department of the Treasury supplementary budget explanation paper published March 9.
One of the few surprises in the Biden budget. A proposed excise tax on electricity usage from crypto mining. Phasing in at 10% in year one and climbing to 30%. pic.twitter.com/UPgUdr8CeG
— John Buhl (@jbuhl35) March 9, 2023
It was suggested that the tax would go into effect after December 31 and would be phased in over three years at a rate of 10% each year, rising to the top tax rate of 30% by the third year.
The "amount and type of electricity used as well as the value of that electricity" would be subject to reporting requirements for cryptocurrency miners.
Crypto miners who obtain their electricity off-grid would still be liable for the tax and would need to calculate the cost of any "electricity generating plant" output.
Treasury cited "negative environmental effects," "increased pricing for individuals using a grid shared with the operations," and "uncertainty and hazards to local utilities and communities" as reasons for the tax.
“An excise tax on electricity usage by digital asset miners could reduce mining activity along with its associated environmental impacts and other harms.”
The White House acknowledged in a statement on March 9 that it is looking to stop a tax plan for cryptocurrency transactions that it thinks would earn $24 billion.
The tax-loss harvesting practice of selling digital assets at a loss for tax reasons and then buying them again right away is permitted under current regulations for cryptocurrency investors.
The new regulations would align cryptocurrency trading tax laws with those governing stocks, where such a tactic is prohibited by wash sale regulations.
