In the “General Explanation of the Government’s Fiscal Year 2025 Revenue Proposal” issued by the U.S. Department of the Treasury, the executive authority emphasizes that existing laws do not specifically regulate digital assets, except for brokers and cash transaction reports. Therefore, the government plans to levy a consumption tax on digital asset mining activities. The Treasury Department explains:
“Any company that uses computational 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, the company must also report the value of the electricity used. In addition, miners who rent 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 stages: 10% in the first year, 20% in the second year, and 30% in the third year. Additionally, this tax measure also applies to companies that mine cryptocurrencies using self-generated electricity, meaning 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 tactic to suppress Bitcoin development and promote central bank digital currencies (CBDCs) on X platform.
Meanwhile, U.S. Senator Cynthia Lummis also publicly opposes this tax proposal on X. She stated that although including cryptocurrencies in the budget shows 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 consumption. On March 9, 2023, Biden also tried to implement the same tax policy on miners in the fiscal year 2024 budget proposal.
Bitcoin will experience a halving of block rewards in April this year, and after that, miners’ income will be greatly affected. If the Biden administration imposes additional taxes on mining companies at this critical moment, it will undoubtedly have a serious impact on the U.S. cryptocurrency mining industry.
