Recently, The Biden administration is proposing a 30% tax on the electricity used in cryptocurrency mining in order to minimize the industry’s impact on climate change. As proposed, the tax would be phased in over three years, starting at 10% next year, then rising to 20%, and finally 30%.
The White House is of the opinion that cryptocurrency mining is a major contributor to climate change, and that the tax is necessary to make sure that the United States is not subsidizing the environmental costs of this activity. The argument made in the proposal is that cryptocurrency mining companies do not already cover all of the costs they place on society, including increased energy costs, local environmental damage, and climate change caused by increasing greenhouse gas emissions.
On the other hand, the cryptocurrency industry has been critical with the proposal, arguing that it would stifle innovation and make the United States less competitive in the global crypto market.
It is still unclear whether the tax will be passed by Congress. However, the proposal is a sign that the Biden administration is taking the environmental impact of cryptocurrency mining seriously.
Here are some of the advantages and disadvantages of the climate change tax on the crypto space:
Good Side:
- The tax could help to reduce the environmental impact of cryptocurrency mining.
- The tax could generate revenue that could be used to fund climate change mitigation efforts.
- The tax could help to level the playing field between cryptocurrency miners and other energy users.
Bad Side:
- The tax could stifle innovation in the cryptocurrency industry.
- The tax could make the United States less competitive in the global crypto market.
- The tax could be difficult to enforce.
Overall, It is still too early to say what the impact of the climate change tax on crypto will be. However, with the proposal, the Biden administration looks all serious with crypto mining. Cryptocurrency and the blockchain space is here to stay and will definitely scale through as many obstacles that come in its way.
Disclosure: This is not trading or investment advice. Always do your research before buying any cryptocurrency or investing in any projects.
Photo by Kelly Sikkema on Unsplash
