“Mounting Pressure on US Mining: Biden’s 2025 Budget Plan Imposes 30% Consumption Tax on Cryptocurrency Mining Electricity”

"Mounting Pressure on US Mining: Biden's 2025 Budget Plan Imposes 30% Consumption Tax on Cryptocurrency Mining Electricity"

"Mounting Pressure on US Mining: Biden's 2025 Budget Plan Imposes 30% Consumption Tax on Cryptocurrency Mining Electricity"

In the “General Explanation of the Government Fiscal Year 2025 Revenue Proposal” released by the US Department of the Treasury, the administration emphasizes that existing laws do not specifically regulate digital assets, except for brokers and cash transaction reports. Therefore, the government plans to impose a consumption tax on digital asset mining activities. The Treasury Department explains:

“Any company that uses computing resources to mine digital assets, whether owned or leased, will be subject to a consumption tax equivalent to 30% of the electricity cost for mining their digital assets.”

If this policy is implemented, cryptocurrency mining companies will need to report the amount and type of electricity they consume. If the electricity is purchased externally, companies must also report the value of the electricity used. In addition, miners who lease computing power will also need to report the value of the electricity they purchase from their hosting companies, which will serve as the basis for taxation.

According to the government, this proposal will apply to tax years after December 31, 2024, and the government plans to implement this tax in three phases: 10% in the first year, 20% in the second year, and 30% in the third year. Furthermore, this tax measure also applies to companies that mine cryptocurrencies using self-generated power, which means that even miners using solar or wind energy will be affected.

Pierre Rochard, Vice President of Research at Riot Platforms, a Bitcoin mining infrastructure company, criticized this as a political means to suppress the development of Bitcoin and promote Central Bank Digital Currencies (CBDC) on X platform.

Meanwhile, US Senator Cynthia Lummis also publicly opposed this tax proposal on X. She stated that although including cryptocurrency in the budget demonstrates the government’s positive attitude towards cryptocurrencies, a 30% tax will undermine the industry’s foothold in the United States.

It is worth mentioning that this is not the first time the Biden administration has attempted to impose a 30% tax on cryptocurrency miners’ electricity. On March 9, 2023, Biden also attempted to implement the same tax policy on miners in the 2024 budget proposal.

Bitcoin will experience a halving of block rewards in April this year, which will greatly affect miners’ income. If the Biden administration imposes additional taxes on mining companies at this critical moment, it will undoubtedly have a severe impact on the US cryptocurrency mining industry.