Crypto Miners Face 30% Tax in Biden’s New Proposed Budget

Crypto mining firms operating in the US could possibly face a 30% excise tax on electricity used for crypto mining. According to documents released by the Department of Treasury, President Biden’s proposal is expected to take effect after December 31st.

Notably, the excise tax would gradually increase over three years at a rate of 10% in the first year, 20% in the second year, and 30% in the third year.

Based on the details of the proposal, crypto-mining firms would need to declare the quantity, kind, and price of electricity utilized, so it can be taxed. In addition, crypto companies under a lease tenure would be taxed based on the value of the power used by the lessor firm related to the leased capacity. 

On the other hand, businesses that generate or purchase power off-grid would be liable to an excise tax equal to 30% of the projected cost of electricity. This implies that mining companies that generate their own electricity, such as renewable energy, will continue to pay taxes on the value of that electricity.

Meanwhile, this is not the first time taxes have been proposed on digital assets. The US Internal Revenue Service (IRS) previously issued a guideline to taxpayers regarding cryptocurrency income reporting.

Various Governments Impose Taxes on Crypto Mining

The decision to impose taxes on crypto mining firms ultimately falls to the government or tax authorities in the jurisdiction where the firms operate. Given the industry’s growth, governments may see taxing crypto-mining firms as a way to generate revenue.

On the contrary, governments may view cryptocurrency mining as a potentially harmful activity that should be regulated and taxed similarly to other industries. For instance, the European Central Bank (ECB) has called for an outright ban on mining activities due to high energy consumption.

Furthermore, miners may also be subject to sales tax and other types of taxes, depending on the specific laws of their jurisdiction. For example, the Argentine province of Buenos Aires has modified its tax laws by imposing a 4% on estimated income generated by miners.