Biden proposes 30% tax on crypto mining
taxfoundation.org
taxfoundation.org
I do agree that (this type of) crypto mining is a sad waste of resources, and globally suboptimal for the world economy. But there's more to rationality and to morality than making performative gestures against bad things.
Also strong disagree that local impacts of crypto mines are net positive - here in Texas we have to pay miners not to burn electricity for their fantasy dollars just to keep the AC on at grandma's house in the summer.
Good riddance.
It seems like lunacy when you put it that way.
But I'd rather pay crypto miners to shed load during peak times rather than suffer blackouts at hospitals, chemical plants and water treatment facilities.
Grid stability isn't a joke, and sometimes the least-bad option is still bad. Until we have better storage solutions, flexible demand is a necessary evil.
Maybe paying miners not to mine is a lesser evil than paying even more to spin up filthy coal peaker plants and still have rotating outages.
What it is now is effectively extortion.
If you include all fiat currencies in that category I think that's a keen name.
If it's just a title to bad-mouth crypto in some arbitrary way -- well -- a lot of very real stuff has been bought with crypto, and name-calling generally attracts the very worst allies.
I get the energy concern, and mostly agree with you, but i'm not sure we should pretend that fiat currencies have these problems fixed.
Military backing for the sake of currency stability requires X amount of energy daily to facilitate, it's just not draining Texas. 'Not my problem'?
All currencies are fantasies: rocks,[1] sea shells, paper, bits.
Money is an human invention[2] and social contract[3] to help in interactions for goods and services.
[1] https://en.wikipedia.org/wiki/Rai_stones
[2] https://www.goodreads.com/en/book/show/50358103
[3] https://en.wikipedia.org/wiki/Debt:_The_First_5000_Years
The bulk of the money goes to supply and transportation, which is usually a foreign state or a trans-national entity of some kind, far far from the point of consumption.
Mexico (in this example) could try to siphon off money through a tax or regularion or by investing capital in local supply, but the OP believes taxes/regularions are just a way to foreclose on any opportunity because the miners will just go elsewhere, and investing capital in growing local supply means redirecting it from somewhere else (assuming you can even make local supply price competitive without subsidies).
Some spending can stay local and benefit local economies. Spending on power is generally not one of those.
Both the mining itself, and many forms of electricity (especially the cheaper kinds), do not require a lot of labour.
Does this count as reputable?
The bar for proof here is pretty low, it isn't like I am claiming to prove that the MRNA vaccine works or not.
Do you need to see my receipts for purchases at the local stores? My airbnb account?
It creates an incentive in that country to tax it. If you have followed EU's Carbon Border Adjustment Mechanism, it is exactly how the EU intends to export its legislation. It says: your imports are going to be taxed on their CO2 emissions, unless you implement a tax of your own on their CO2 emissions. The exporting country now has every incentive to tax it and remove the tariff.
driving up costs of electricity due to increased demand and encouraging the continued use of fossil fuels isn't positive. it is good for the wealth of the energy sector but a negative drag on everything else.
I understand that US national policy is not done in a vacuum, but it seems reasonable for a nation to start with its best interests in mind.
What do you think?
Wait until you hear about generative AI spam!
It doesn't- but why would Biden care about that? If it moves to a different country then it reduces demand in our local grid. That's a GOOD thing.
This is pretty misleading: the US's effective corporate tax rate is significantly below the OECD average[1], and has been so for a while. The Tax Foundation could lay the blame for this on tax complexity, but curiously only seems to blame tax complexity when taxes go up for businesses, not down.
Edit: By the Tax Foundation's own calculations, the OECD average effective rate is around 26% when adjusted by GDP[1]. So 28% is not extraordinarily out of band, especially when we consider that that's statutory and not effective.
[1]: https://taxfoundation.org/data/all/global/corporate-tax-rate...
Yes, mining is "wasting" electricity, but it's not a full picture. Sometimes being able to "waste" electricity is actually very useful. Mining is a immediately reactive and flexible load on the grid, and in a free market , at the near-perfect competition, mining naturally gravitates to places where electricity is abundant and can benefit from doing something productive (burning off methane, capture over-production).
People who wish to ban or "harm" mining have no idea what they are talking about. Electricity is not something that can sit in a basement and wait to be used indefinitely if someone doesn't just "waste" it. That's just not how things work.
From the perspective of cryptocurrency users banning also completely doesn't matter. If you ban mining in place X, then too bad for the miners in X, mining will just move to a different location, where possibly electricity might be less clean (not from renewables), and on the global scale things just get worse.
The thing with miners is also that they are highly portable. The moment it's banned, heavily taxed or simply better uses for electricity out-competed it, they will pack them on shipping containers and off they go, so capital risk is lower.
The fact that cryptocurrency users are willing to subsidize production and deployment of such a flexible and portable load balancers is an opportunity, irrespective what one thinks of cryptocurrencies, but most minds are too narrow to go over "uses electricity == bad" narrative.
I really fail to understand the fetish of the crypto crowd with the word fiat and whatever they think it means. I get it, people just want to gamble and want to be ultra rich without doing anything, I am sure there are ways of doing that (gambling) without wasting a ton of energy.
Non-fiat currency is physically tied to the creation of real-world value, like say mining gold which has thousands of real-world applications. Traditional fiat currencies are fundamentally designed to be a proxy for real world value. In a well designed system it’s most of its creation is tied to debt issues to, say a gold mine or an oil well or solar farm. Cryptocurrency is - in its utter insanity - fundamentally tied to the destruction of physical value. That is, burning electricity while creating nothing useful. So: more fiat than fiat. Another huge step removed from the creation of real physical valuables.
Traditional currencies are far more efficient and a basic necessity for the economy to function at all.
Cryptocurrency is fundamentally unsuited to become a real currency by its very design. Every one I’ve seen so far has been made by people who seem to lack even the most basic understanding of what the main origin of currency is. (Hint: it’s not metal coins..)
The US went off the gold standard in 1971. It's all just bullshit paper now. I'm not sure why you're talking about something that doesn't even exist today.
I'd love it if "traditional fiat" currencies existed as you describe, but they don't.
The energy consumption is not the result of anything, it is a fundamental design element. [1] To reach a meaningful consensus, you have to give all participating users equal or at least similar voting power. But Bitcoin does not want a central database of users which opens the door for Sybil attacks - you can just invent an essentially unlimited number of users out of thin air and have them vote the way you want. The solution to this problem in case of Bitcoin is to tie votes to computing resources for calculating hashes. While you can invent users out of thin, you can not invent computing power out of thin air. This gives each user voting power in proportion to the amount of money they are willing to invest in computing resources. Not really equal voting power for all users but close enough in practice. If miners would not burn enormous amounts of energy, anyone could come along and influence or alter the transaction history or just mine empty blocks and with that block all transactions.
[1] For Bitcoin and similar proof of work systems, there are alternatives.
With crypto it's at least harder than that.
Cryptocurrencies are math. Governments cannot control math, as much as authoritarians wish they could.
>That people in developed countries don't want governments to control money to claw it back from fraudsters is the second biggest fantasy.
The assumption that most people in developed countries want government to "control money" is delusional at best. There are certainly many people in developed countries who want the government to control money, control speech, control political discourse and control everything else - but there are just as many who oppose all of that.
And there's the misconception. Trading government money for cryptocurrency is subject to regulation. Do you think you can hack the President's communication and send it to Putin because it's math? Do you think you can set the interest rate on a loan to 500% because it's math?
> The assumption that most people in developed countries want government to "control money" is delusional at best.
How strange then that every single developed democracy has implemented it. I must have just imagined the entire field of tort law and people clamoring for relief from the courts.
https://en.wikipedia.org/wiki/Hyperinflation_in_Venezuela
> https://en.wikipedia.org/wiki/Hyperinflation_in_Zimbabwe
> https://www.usinflationcalculator.com
You are trying to retcon the reason why (e.g.) Bitcoin was created in the first place:
> Commerce on the Internet has come to rely almost exclusively on financial institutions serving as trusted third parties to process electronic payments. While the system works well enough for most transactions, it still suffers from the inherent weaknesses of the trust based model. Completely non-reversible transactions are not really possible, since financial institutions cannot avoid mediating disputes. The cost of mediation increases transaction costs, limiting the minimum practical transaction size and cutting off the possibility for small casual transactions, and there is a broader cost in the loss of ability to make non-reversible payments for non- reversible services. With the possibility of reversal, the need for trust spreads. Merchants must be wary of their customers, hassling them for more information than they would otherwise need. A certain percentage of fraud is accepted as unavoidable. These costs and payment uncertainties can be avoided in person by using physical currency, but no mechanism exists to make payments over a communications channel without a trusted party.
However even with the volatility, it's way more stable than the Venezuelan currency. Crypto is widely used in Venezuela.
The peer to peer network enabled them to circumvent the banking system, which is why BTC was created, according to the original paper.
Trying to regulate what people are allowed to spend their money on just because you personally don't agree those things are valuable is a fool's errand.
To the extent there are negative externalities associated with electricity use those externalities are not specific to crypto, therefore singling out crypto for attack just because it uses electricity is unfair and harmful to the broader economy.
And crypto doesn’t use electricity, it wastes it in on a completely arbitrary task.
- Corporate tax rate increases by 7% for all businesses
- 30% excise tax on electricity costs associated with crypto mining
Curious how you measure that electrons are flowing towards silicon calculating hash functions but only hash functions where the output is not used 99.99% of the time but once in a while goes into a bitcoin block.
what if 51% of your server duties are handling API requests for your SAAS or some bullshit product, and 49% is crypto? is your electric bill crypto related or is that just something you do with idle power?
or you start a company that builds battery storage to accumulate energy off-peak for some admirable "green purposes" - meanwhile another company (that you own) is a customer of this and uses power from that storage facility "free of charge" since it is a humble research project.
so many ways to loophole this.
power is power, if you are paying for it you should be able to use it how you please. considering marijuana is federally illegal, shouldn't power for grow operations be treated the same way? it's a slippery slope.
if they want to disincentivize crypto they need to do something about the tragic state of the us dollar.
I see this time and time again, but public officials aren't idiots. The IRS aren't idiots. Broad, non-specific laws are enforceable. Eventually the burden will be on you to prove you're not doing anything illegal. Fun fact: the vast majority of people who would make arguments like this are hiding an illegal crypto operation.
> power is power, if you are paying for it you should be able to use it how you please
different users have different rates in most regions depending on their demands. Some users even can get paid to use power, when the grid frequency goes too high.
(don't look up what red diesel is if you don't want your bubble popped)
And mining taxes on power usage is just ridiculous... why don't you add an extra tax on gold used for jewelry too? and luxury cars, yachts, and anything that isn't really useful?
These are all really good ideas... Great comment!
https://en.wikipedia.org/wiki/Luxury_tax#:~:text=United%20St....
10% from 1991 to 2002 it seems.
There’s two sides to eating meat:
1: In many cases it’s actually not less efficient than eating a plant. If I eat some lamb or sheep in my area, they’re eating wild stuff growing in the hills and mountains. I’d like to see you try to eat what they’re eating, or grow anything we can eat there without destroying nature. In many cases cattle is raised on land not suited for growing food for human consumption, especially high quality protein. In many regions, you’d have no chance of getting local sustainable high quality proteins without meat or fish.
1.5: There’s also the aspect that raising animals is the only way to do sustainable, regenerative agriculture. How do sustainably fertilise your soil without them?
2: In the cases where meat is produced in an unsustainable way, it IS indeed a luxury that should be taxed. We shouldn’t cut down rainforest to grow soy for cattle feed or to make pastures for cattle for export.
What gets passed on is things that increase costs for the industry like property taxes. If every landlord in the city pays an extra 50$ a month/unit in property taxes you bet rent's going up to compensate.
Arguably food price inflation has been like this. Clearly the market can withstand it if everyone moves together.
All this is not to say that taxes should never be increased of course.
From another point of view, individuals (are supposed to) react to taxes by reducing 'luxury' spending, but businesses don't enjoy luxuries, only their investors do.
It's just you can't blanket assume that a particular price point is going to increase or decrease sales until you try it, so...
I think this happens all the time: it's not uncommon to see a restaurant review that goes something like, "I'd been coming here for years, but the quality of food has gone down recently". Granted, you don't know why: maybe they switched to cheaper ingredients, or maybe they got some new cooks that prepare things poorly (or even just differently), etc. But some type of cost-cutting measure could be to blame. And if that person -- and others (and perhaps potential new customers who see the recent bad reviews) -- stops visiting or visits less frequently, those cost-cutting measures may turn out to not have been worth it.
Like how the corporate tax decreases in 2018 got passed on to consumers...right? Don't we all remember the big deflation in the past 6 years? And all that money was totally not used for stock buybacks and what not, right?
They tried that, back in November 1991.
https://en.wikipedia.org/wiki/Luxury_tax#United_States
It covered more than just yachts, but the biggest loser was the yacht industry, which saw sales plummet:
[quoting wikipedia]: The federal government estimated that it would raise $9 billion in excess revenues over the following five-year period. However, only two years after its imposition, in August 1993, at the behest of the luxury yacht industry, President Bill Clinton and Congress eliminated the "luxury tax" citing a loss in jobs.[6]
Atwood, Liz. "Boat dealers predict sales increase Luxury tax repeal helps ANNE ARUNDEL COUNTY BUSINESS". baltimoresun.com. Retrieved 23 August 2019.
[end wikipedia quote]
It turns out that luxuries are just that, luxuries, and the rich were more than willing to "do without" yet another yacht (or other luxury good) while the tax was on the books, and the tax never netted the "budget gains" its proponents predicted it would net, due to sales of all the taxed goods dropping off precipitously.
A loss, felt in particular, by the many thousands of people employed in the vast supply chain which is the yacht building industry.
I’m not sure what you mean by production being “invested to further increase productivity” - seems like a non-sequitur.
> Impose a new 30 percent excise tax on electricity costs associated with digital asset mining
Seems like an effective incentive to migrate cryptocurrencies from Proof-of-Work to the more eco-friendly Proof-of-Stake. Ethereum already did this two years ago.
Imagine a solar or wind power plant that currently has sufficiently problematic swings in electricity production. A crypto-mining data center nearby could consume some if not all of this problematic excess electricity production more gracefully than disabling sections of the solar or wind power plant. In this application, crypto-mining would not be the primary reason to have all of this crypto-mining hardware. As the local grid requires more power generation, crypto-mining nodes could be turned offline to offset their electricity use.
This thought is just something I had, and there might be problems with it.
Edit: The hacker news guidelines say don't editorialise the title.
"Otherwise please use the original title, unless it is misleading or linkbait; don't editorialize.".
Why not just go all out and propose a carbon tax and credit system? I guess that's too complicated for the electorate to understand?