US targets crypto miners with their proposed DAME Tax to account for their cost to society

US targets crypto miners with their proposed DAME Tax to account for their cost to society

The US Government wants crypto mining firms to pay for the costs they place on society, and that means more taxes  

The US Government has confirmed plans to create a new tax that specifically targets cryptocurrency mining firms that aims to offset the costs that these companies place on others in the form of higher energy costs, increases environmental pollution, and greenhouse emissions that affect the global climate. 

It is believed that the Digital Asset Mining Energy excise tax, the “DIME Tax” can generate $3.5 billion for the US government over ten years by taxing the electricity use of cryptocurrency mining firms. This tax is intended to be phased in over three years with firms paying a 10% tax in 2024, a 20% tax in 2025, and a 30% tax in 2026. This tax is currently being considered as part of this years US budget.

In the White House press release on the proposed tax, the US government stated that crypto mining firms do not pay the full cost that their business imposes on others. Crytocurrency mining is a power intensive computational workload, which means that cryptocurrency mining operations place a huge strain on the power grids of areas where they operate. This increased load results in higher electricity costs for everyone in the region, and makes the local power grids of impacted areas more reliant on more expensive, and more pollutant, power sources.

The DIME tax is designed to force cryptocurrency mining firms to pay more for their power, generation additional revenue for the US government while encouraging crypto mining operations to reduce their power use and to have a lesser impact on local power grids. 

     Currently, cryptomining firms do not have to pay for the full cost they impose on others, in the form of local environmental pollution, higher energy prices, and the impacts of increased greenhouse gas emissions on the climate. The DAME tax encourages firms to start taking better account of the harms they impose on society.

It is estimated that the electricity usage of US Cryptocurrency mining operations is close to that of the power required for all residential lighting systems in the US, which is more than what is used to power all of the computers use in the country. Below is a graph that illustrates the estimated power use of cryptocurrency mining operations in the US in 2022.

US targets crypto miners with their proposed DAME Tax to account for their cost to society

Cryptocurrency mining is a power-intensive task, and those power requirements have an impact. With their DIME Tax, the US government wants to generate more revenue at the expense of these operations and push for cryptocurrency mining operations to increase the power efficiency of their industry and reduce their impact on local power grids.

The DIME tax is a way for the US government to help tackle climate change and to generate additional revenues that can be used to benefit the nation. The White House says that “the DAME tax is to start having cryptominers pay their fair share of the costs imposed on local communities and the environment.”

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