US Debt Ceiling Deal Blocks 30% Bitcoin Mining Tax• May 31, 2023 11:49 am • Comments
In general, the crypto community has already known that the current regulatory environment within the US is not favorable towards the crypto industry.
Therefore, it was already expected that the US debt ceiling deal would not have any positive components for digital assets.
However, it was noted that there were some parts of the deal which was positive for crypto from a tax perspective.
The deal appears to block some crypto related taxes that were proposed by the Biden administration such as the proposed 30% tax on all crypto mining activities.
If this tax is removed, this can ensure that crypto mining can still remain profitable which will help the industry.
— Forbes Crypto (@ForbesCrypto) May 30, 2023
Pierre Rochard, VP of Research at Riot Platforms, questioned whether “the Administration’s DAME excise tax proposal is gone?” given that Bitcoin mining wasn’t mentioned in the text of the bill, dubbed the “Fiscal Responsibility 5 Act of 2023.” U.S. Congressman Warren Davidson (R-OH-08) responded in a tweet that, “Yes, one of the victories is blocking proposed taxes.”
The debt ceiling agreement, which still faces thorough scrutiny and debates in Congress, comes in the form of a comprehensive 99-page bill aimed at suspending the nation’s debt limit until 2025, thereby preventing a federal default, while simultaneously imposing restrictions on government spending.
The proposal for this tax was introduced earlier in March of this year where it required digital asset miners to disclose the amount of energy they consumed when mining.
Of course, this spurred a lot of negative criticism where many claimed that this would negatively impact the mining industry and block crypto from achieving mainstream adoption.
Robert F. Kennedy, one of the pro-crypto presidential candidates, had also commented on the tax and stated that it made no sense.
Kennedy stated that bitcoin mining uses the same amount of energy as video games and there are no bans for those.
As a result, Kennedy believes that the only reason the tax was proposed is because crypto is a threat to the existing financial power structure.
Congress' draft debt-ceiling bill doesn't include a heavy crypto tax that the White House had proposed. https://t.co/b4wJFUxQIr
— Barron's (@barronsonline) May 31, 2023
The White House pointed out the significant energy consumption by miners and criticized its negative impact on the environment. It also estimated that the DAME act would bring in $3.5 billion in revenue over 10 years.
The move sparked backlash from many crypto miners, who criticized it as an obvious attempt to sideline and marginalize the crypto community.
Meanwhile, New York-based Bit Digital said it would safeguard its operations by expanding to Iceland as a proactive measure against the proposed crypto mining tax.
It’s important to note that neither the White House nor the US Treasury has confirmed that the mining tax has been scrapped. Blockworks has reached out for comment.
The White House’s plan to tax crypto mining is currently on hold, while the debt ceiling deal awaits approval from both the House and Senate to become law.
— Bitcoin Magazine (@BitcoinMagazine) May 31, 2023
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