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By Landon Manning
A tax proposed by the Biden Administration to curtail Bitcoin mining in the United States has apparently been shelved indefinitely, thanks to the terms of a compromise over the U.S. debt ceiling.
The tax in question was known as the Digital Asset Mining Energy (DAME) excise tax, and it was originally made public by the White House in early May as part of a broader budget proposal. Primarily targeting the environmental impact of the crypto industry, DAME as originally envisioned would have required all crypto miners in the United States to pay a tax equivalent to 30% of the cost of the electricity these companies use. Such a tax would not only be devastating to a business that relies on cheap power costs, but would also completely ignore the reality that a huge number of bitcoin miners today are reliant on renewable energy.
However, this plan, and indeed all the White House’s proposals for economic functioning, have been dramatically hampered by the latest round of negotiation over the U.S. debt ceiling. In essence, without a vote of confidence from an embittered Congress, the federal government would have defaulted on its loans, creating a crisis for the dollar. To continue the normal functioning of the global reserve currency, a deal was reached in late May that largely focused on concessions over economic policy. It’s thanks to this deal that the DAME act seems well and truly shuttered.
The crypto community has generally reacted to this news with celebration, as some of the largest mining firms are seeing massive stock rallies on top of a year that has already been successful. For the moment, it does not seem like there is political will to carry out an attack on Bitcoin from this angle.
Just because this plan has failed, though, does not mean that crypto miners are safe from similar taxes on other fronts. Considering that this proposal collapsed over the federal government’s spending, Bitcoiners should be wary of the White House’s arguments that the DAME tax would generate billions for federal coffers. In other words, it seems very likely that similar attacks on crypto mining will be proposed in the future, possibly in a reworked fashion to seem more economically valuable or otherwise accompanied by increased efforts to link crypto mining and climate change.
For now, DAME failed in the same month it was proposed, and the immediate threat to Bitcoin has passed. The speed of this victory should remind the world of how far cryptocurrency has come in the last few years; an economic maverick has seen enough acceptance within the halls of power that it now has no shortage of friends in the U.S. House and Senate. As the crypto industry continues to grow and represent economic freedom for millions of people worldwide, it seems safe to say that it’s smart to bet on Bitcoin.
The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.
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