The White House has published a new blog post reiterating its plans to impose a
30% federal tax
for all electricity usage for digital asset mining.
The post, written by the White House's Council of Economic Advisors, also outlined the details of the Digital Asset Mining Energy (DAME) tax.
The tax proposal aims to reduce crypto mining activity in the U.S. that dramatically grew and made the country a center in the industry after China banned crypto mining within its borders in
2021.
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U.S. President Joe Biden's administration suggests that crypto mining harms both the environment, by causing pollution with electricity usage, and local communities, by imposing an extra
burden on the equipment, causing service interruptions and creating safety risks.
- The report also argues that crypto miners burden the rest of society with energy costs.
- The White House believes that the new tax will encourage crypto mining firms to better consider the harms they cause to society.
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In the post, the council created a chart showing that crypto mining currently consumes more power than computers, fans, freezers, and washers in the U.S.
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The administration's advisors underlined that there is little evidence regarding the benefits of crypto mining for local communities in the form of employment or economic opportunity.
In cryptocurrencies based on the proof-of-work (PoW) model like Bitcoin, computers have to perform complex algorithms to create new coins, requiring massive amounts of computing power and
electricity that could harm the environment.
- Only two networks are still using the PoW model: Bitcoin and Dogecoin.
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Another major
blockchain
, Ethereum, recently switched from PoW to a proof-of-stake (PoS) model with the Merge upgrade to reduce the network's energy consumption by 99.95%.
