US government considers taxing Bitcoin to mitigate environmental effects

The US government has proposed taxing crypto miners to reduce the industry's heavy environmental impact, but experts say the measure could simply shift the problem elsewhere. It warns that there is.

Cryptocurrencies such as Bitcoin are kept secure through a process called mining, which involves intensive calculations and large amounts of power consumption. According to the latest data from the University of Cambridge, Bitcoin is 0.69% of all electricity used worldwide.

In America, the government Estimate Up to 2.3 percent of the nation's electricity use in 2023 will come from just 137 mining operations, and electricity rates in Texas are increasing by 5 percent. Directly linked to increased demand Caused by miners.President Joe Biden's 2025 budget proposal Cryptocurrency mining “has the potential to harm the environment, increase energy prices for those who share power grids with digital asset miners, as well as have environmental justice implications.”

The budget therefore proposes a 30% tax on miners' total energy costs, which would apply to both electricity from the grid and electricity generated by miners themselves. It will be phased in, with 10 percent starting in 2025, 20 percent in 2026, and finally 30 percent in 2027. A similar tax was proposed by Biden last year but did not pass. Although passed by the House and Senate and signed into law, this second attempt now faces hurdles.

The move, which comes as Bitcoin has soared to an all-time high of more than £56,000 in recent weeks, has drawn heavy criticism from the crypto industry.Dennis Porter of Satoshi Action Fund tweeted It claimed this was a “backdoor ban” on mining and promised: “We will vigorously oppose this attempt at targeted discrimination without hesitation!”

new scientist Several large Bitcoin mining companies have been approached for comment on the proposed tax. Block Mining, Frontier Mining, and HIVE Digital Technologies did not respond, while TeraWulf declined to comment.

But taxing the industry could have unintended consequences. alex de vries At VU Amsterdam in the Netherlands. China's ban on bitcoin mining in 2021 has prompted companies to move operations to countries such as Kazakhstan, where more than 90% of the country's electricity supply comes from fossil fuels such as coal.

“Perhaps it doesn’t actually solve anything, because mining operations are highly mobile and can be based anywhere, moving from country to country in search of better regulatory environments or cheaper power.” They won’t, says De Vries. “Climate change is a global problem, and moving emissions from one country to another, or worsening power supplies, is actually making the global problem worse.”

“Ideally, we would like to address this issue at a global level,” says de Vries. “You want to reduce the emissions of these miners.” De Vries has long advocated for Bitcoin to follow the lead of the cryptocurrency Ethereum, which has changed the way it operates. changed, abolished mining, and reduced power consumption by 99.99%. But most Bitcoin developers weren’t interested in the change, he said.