White House proposes 30 percent tax on electricity used for crypto mining
engadget.com
engadget.com
FWIW I do not support the crypto space either, but if they want to use a computer to run an infinite loop for the end of time that's their business.
Perhaps spending more effort on improving the power grid and using more renewable resources would be a better effort?
The folks who got in early and made millions in Crypto reaped the benefit but no new comers could ever realize the same potential because we've taxed the snot out of it. Closed that loop hole (not that I have much faith in crypto anyway.)
You're taxed on how you're using energy. We're also taxed on how we use money. If we buy an electric car, we (used to) get a tax break.
You could see a tax break on energy used to charge an electric car, say.
I don't see anything in this proposal that would prohibit running an infinite loop for the end of time.
ideally the federal government would not have an opinion on what citizens use electricity for, only that the externalities of power generation are priced in.
at a high level, crypto mining is just arbitraging the price of electricity. if the externalities are priced into generation, this is a non issue. if they're not, a tax should be applied that doesn't discriminate by use case.
Only if you take the stance that energy generation and use sure be governed by pure free market economics, which never works out in the real world. Natural resources are limited. Mining/drilling has environmental impacts. People need energy to survive. It makes a lot more sense to go the opposite direction – treat it as a public good (which it is) and regulate usage. Otherwise you will end up in the inevitable reality where there is a large bitcoin mine in town printing cash for its owners and no one living around it can afford to heat their houses.
For example, if an individual wants to have christmas lights on their house year round, I think they should be allowed to as long as they can pay their electric bill. However, if a crazy billionaire wants to blast a giant laser into the sky and this causes brown outs due to the power draw to the surrounding community, then I think the community should be able to get the laser shut off. And on the other hand, if the billionaire runs a free entry water park and that causes brownouts, I think the community should be able to decide whether or not to flip the switch.
if this approach also discourages free water parks, I'm okay with that. if the community really wants that, they can weigh it against other public interests and consider funding it out of public coffers.
It's absolutely reasonable -- if not likely -- to think that "the community" thinks of bitcoin mining as a wasteful and stupid idea and is expressing that preference through its politicians. I don't think you're going to see a lot of arguments in terms of "this is political overreach."
but yeah, I don't really expect anyone to care much about crypto bros getting a targeted shafting. dueling windmills would probably be a better use of my time.
And now that crypto has better "work functions" e.g. "proof-of-stake," there's just no reason to not tax this.
All of this probably becomes even more true as load-shifting becomes a bigger deal. Like: currently, replacing gas-powered boilers for 24/7 industrial processes with electrified heating isn't anywhere near cost-effective if you have to pay peak electricity rates for heating, but there are a bunch of new heat-battery companies spinning up that will take advantage of wholesale fluctuations to generate a ton of heat in the middle of the day when the sun's out, heat up a big box of rocks or whatever, and they siphon off the heat over the course of the day as electricity prices spike in the evening. This could dramatically accelerate industrial-heat decarbonization (which is something like 30% of US GHG emissions), but it only works if there's a price trough to take advantage of; if there are crypto-miners there to gobble up all the curtailed power and stabilize the price, the economics don't pencil out, and we're stuck with gas heat for factories. Again, doesn't seem unreasonable as a thing the state would have an opinion about.
This is the entire point of government.
More like – we will cut subsidies on coal by just a little bit and let them try and get profitable by themselves.
...
Any firm using computing resources, whether owned by the firm or leased from others, to mine digital assets would be subject to an excise tax equal to 30 percent of the costs of electricity used in digital asset mining.
Firms engaged in digital asset mining would be required to report the amount and type of electricity used as well as the value of that electricity, if purchased externally. Firms that lease computational capacity would be required to report the value of the electricity used by the lessor firm attributable to the leased capacity, which would serve as the tax base. Firms that produce or acquire power off-grid, for example by using the output of a particular electricity generating plant, would be subject to an excise tax equal to 30 percent of estimated electricity costs.
Except as otherwise provided by the Secretary, the term “digital asset” means any digital representation of value which is recorded on a cryptographically secured distributed ledger or any similar technology as specified by the Secretary.
The proposal would be effective for taxable years beginning after December 31, 2023. The excise tax would be phased in over three years at a rate of 10 percent in the first year, 20 percent in the second, and 30 percent thereafter.
...
From: https://home.treasury.gov/system/files/131/General-Explanati...
This to me, is about not wasting US resources on this. Let other countries waste their electricity on cryptocoin mining if they want to. There's only so much electricity in this country, and there's already plenty of regulations on waste (or attempts to mitigate waste).
Either they pay up, in which case there's a new revenue stream, or they don't, in which case energy prices will go down due to the lowering of demand. A win for the general public and an easy sell. Who said policy was boring?
Wonder how fast it will be copied elsewhere.
It’s the sort of thing they do in banking when they ask what a bank account is for.
The amount of electricity these miners are pulling is insane, and is beginning to affect their neighbors. Its about time we stopped putting up with it.
The IEA suggests the following:
* Chemical manufacturers
* Steelmaking
* Paper mills
* Refineries
Industrial crypto mining is not in good company here.
I don't like the idea of a law deciding what you can and can't compute or that some other wasteful industries get a free pass.
Cryptocoin mining is the easiest thing to get rid of that's both large scale and wasteful.
If you got any other large scale wasteful uses of electricity, please let me know and we can work on getting rid of it too.
> that some other wasteful industries
Please start listing those "other wasteful industries".
how do you know that? are there rankings somewhere? super curious
Your proposal amounts to banning the intermediate grades.
I suspect this is not what you actually want. It is certainly not what I want.
Perhaps a step towards some kind of normalization of crypto in the US.
You can become a European company operating in the US. You can have a shell company operate the mining. You can show no profit.
If your ship flying Country X's flag docks in Europe then under the Paris MOU your flag decides how likely you are to get inspected by local authorities. Does Country X do a great job? Then inspections will be rare and you've nothing to worry about. Not so much? Expect to spend far more of your visits being inspected and if you don't obey inspection rules under the Port State rules too bad, their port, their laws apply, if you don't like it stop coming to Europe. If Country X don't like it, and I promise they don't give a shit once you paid the registration fee, they can take it up with Europe and see how far that gets them.
Smart move?
Maybe get a lady friend to blow on your mouse before you click buy.
https://twitter.com/TimmerFidelity/status/165311478425704038...
Every stalwart crypto supporter talks out of both sides of their mouth every time they are questioned about the actual utility of crypto. Is it the future of money (AKA useful liquidity) or is it a great investment that can only increase in value (AKA speculative deflationary asset)?
It cannot be both and it is certainly not useful as money. Makes you wonder why DOES the line go up?
If you're saying that inflation in general is bad for the economy, I would encourage you to read this: https://www.britannica.com/money/inflation-vs-deflation
If the environmental costs of crypto mining are genuinely your concern, the best solution is to advocate an agnostic solution, like restricting CO2 generating sources of energy, or energy consumption for ALL non-essentials (e.g. tourism, video games, crypto, etc).
Singling out crypto for its environmental costs, and calling for targeted restrictions on it that exempt other non-essential uses of energy, suggests a superficial basis for your position, like a negative emotional association, or dislike of crypto proponents.
In this case, the creation of crypto bits is, ostensibly, wealth creation. Of course the government can tax the materials that go into that asymmetrically, much as many states exempt residential natural gas from tax but not commercial.
But in fact, they don't work that way. Smoking and alcohol consumption is qualitatively different than mining crypto. Due to how much medical expenses are socialized, they generate negative externalities due to the damage they do to health. So-called sin taxes are also discouraging a behavior that we can objectively state is harmful to the person who engages in it.
There is no objective basis on which to claim crypto mining is more harmful than any other non-essential behavior. Using taxes to punish it is an inappropriate use of government power based on the prevailing standards in the Free World.
It generates demand for finite electrical resources that have a net negative externality on the climate. https://www.whitehouse.gov/ostp/news-updates/2022/09/08/fact.... The argument "But people would be using the electricity for something else if not for crypto" is unsupported; given the uniquely mobile and speculative nature of proof-of-work crypto, it is creating an environment to tap gas wells that would otherwise stay shuttered and increase the rate of the climate slide.
While it is perhaps no more harmful than any other non-essential behavior, it's the non-essential behavior that's driving demand to burn fossil fuels. You put taxes where human behavior is, not where it isn't.
The expansion of any industry does that. Singling out crypto suggests something else motivating the measure.
>>The argument "But people would be using the electricity for something else if not for crypto" is unsupported; given the uniquely mobile and speculative nature of proof-of-work crypto,
That argument is not necessary. The point is any non-essential activity that uses electricity has this environmental impact, and said impact could be reduced by taxing CO2 emissions from non-essential activity.
The wells are too far off the beaten path to be economical to run (some gas sources aren't revenus-positive when you factor in transportation), but building out a small crypto-mining shack next to the well and a small refiner and generator is pretty straightforward, and bits can be transported at a fraction of the cost of gas molecules.
That sort of thing would be trivial to tax with this system, because if you're going to build one of these rigs you have to maintain paperwork with the state to open the well (and if you don't, the EPA does independent monitoring and will eventually say "Hey, what's this huge plume of heated exhaust showing up on infrared coming from this farmer's back-acre?").
Let them waste someone else's energy. USA is energy-constrained as it is, we don't need miners coming here wasting electricity for their insane project.