The US has made a decision about the application of excise taxes to domestic Bitcoin miners. Since the idea put forth earlier this month has been formally dropped, the US won’t be imposing any new taxes on the US Bitcoin mining industry. A US regulator verified the development to the media. It is notable that this choice was made right after US President Joe Biden steadfastly refused to reduce the current taxes on cryptocurrency earnings. It appears that the US’s strategy for maintaining its revenue from cryptocurrency taxes while avoiding external pressure on the business is to not impose an excise tax on Bitcoin miners.
The US Council of Economic Advisors (CEA) presented a proposal earlier this month that would require Bitcoin miners to pay a tax equal to 30% of the total amount of energy they used throughout the crypto mining process.
According to a report, the US administration may have decided to scrap this proposal as part of a package of tax-related rebates as it concluded raising the inflation-stricken country’s debt ceiling by two years.
Businesses engaged in bitcoin mining are now protected from all new taxes. A number of difficult algorithms must be solved on sophisticated computers that must be constantly linked to a power source in the energy-intensive process of mining bitcoins. To validate transactions on the Bitcoin blockchain, miners must solve these algorithms, and they are compensated for their efforts.
It is common for communities near Bitcoin mining hubs to experience an electricity supply shortfall, which frequently results in power outages and puts nearby inhabitants through a great deal of inconvenience.
The US government has stated in the past that even if clean energy is used to support crypto mining, it reduces the amount of clean energy available to others, increasing their dependency on electricity produced by fossil fuels while simultaneously raising the cost of that energy.
These problems, together with the damage that BTC mining has done to the environment, are the driving forces behind the proposal to recompense Bitcoin miners monetarily.
The CEA had calculated that the tax on Bitcoin miners might bring in $3.5 billion (approximately Rs. 28,639 crore) to the US Treasury over the course of the next ten years when it submitted the proposal.
If it had been approved, it would have increased the cost of operating a cryptocurrency mining operation, which might have damaged the US’s present status as a haven for miners after China banned crypto operations.
According to data from the Cambridge Centre for Alternative Finance from July 2021, 35.4% of Bitcoin miners were based in the US. That represents an increase of 428 percent from September 2020, making the US the country with the most crypto miners.
According to data from Foundry USA last year, the American states of New York, Texas, Georgia, and Kentucky have become popular destinations for cryptocurrency miners.
