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In a recent revenue proposal document released on 11 March, the U.S. administration overseen by Joe Biden put forward a proposal for a 30% excise tax on crypto mining activities.
This follows the U.S. government’s move to continue regulating the blockchain sphere and seek its own piece of the pie from the recently skyrocketing crypto asset prices. With this crypto mining tax and other regulations proposed in the 2025 fiscal year document, the U.S. Department of the Treasury might bring in $10 billion more in taxes than in previous years, totaling over $42 billion in the next decade. The U.S. is in dire need of reducing its looming financial deficit from previous fiscal years.
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The Crypto Mining Excise Tax
The proposed crypto mining tax will levy an excise on the electricity used by crypto miners to mine blockchain blocks. If the proposal is implemented as stated, the tax would be phased in starting at 10% for the first fiscal year, increasing to 20% in the second, and finally reaching 30% in the third year. Both companies owning computing resources that consume electricity for mining purposes and those leasing it from others must pay the tax, even if the firms acquire electricity off the grid or by other independent means.
This final detail contradicts statements made earlier in the document, which state that “the increase in energy consumption attributable to the growth of digital asset mining has negative environmental effects… [it] creates uncertainty and risks to local utilities and communities.” Uncertainty of the true motives behind the proposal continues to raise concerns among both crypto industry professionals and government legislators.
The Turn From Proof-of-Work To Proof-of-Stake
With this looming tax on Proof-of-Work (PoW) crypto mining, Proof-of-Stake (PoS) consensus algorithms such as Ouroboros on the Cardano blockchain offer an attractive alternative for investors looking to make their cryptocurrency work for them. With the Cardano price prediction showing an overall positive sentiment, staking large amounts of the blockchain’s currency in PoS appears all the more reasonable. Rising electricity prices have already driven many PoW miners to outsource mining or switch to other consensus algorithms.
Influential Voices Speak Out
Many influential voices in the crypto community have raised concerns over these new regulations, with Pierre Rochard of Riot Platforms stating: “All of the reasons they provide are pretextual, their real reason is that they want to suppress Bitcoin and launch a CBDC [Central Bank Digital Currency].” Rochard even went so far as to photoshop the U.S. government’s 2025 fiscal year budget to (incorrectly) show that the White House expected the BTC/USD price to be over $6,000,000 for 2033. Others such as Wyoming Senator Cynthia Lummis remain bullish on the 2025 budget and publicly stated their opposition to the crypto mining tax, bolstering support from her peers.
Wash Trading Under Scrutiny
Another proposal in the document seeks to close a loophole allowing NFT traders to wash trade crypto assets. Wash trading involves traders buying and selling an asset at a high frequency to manipulate volume and pricing artificially. Further, wash trading rules prohibit traditional financial traders from selling an asset at a loss to claim a significant tax deduction and repurchase the same asset immediately afterward. This proposal will extend these regulations to the crypto market.
Regulations Come As No Surprise
This effort from the U.S. government comes as no surprise to the crypto industry. Ever since Bitcoin hit the headlines, governments from around the world have been seeking ways to control this groundbreaking type of asset and find a way to reap rewards from it as they already do in existing financial systems. The U.S. Securities and Exchange Commission (SEC) is actively pursuing lawsuits against several crypto-centric businesses such as Ripple (XRP), Coinbase, Binance, and others for their activities in the crypto industry. China has outright banned crypto mining and cryptocurrencies as a threat to its authoritarian rule.
Conclusion
As the industry evolves, so do the regulations surrounding it, and this revenue proposal document from the U.S. Department of the Treasury is just the latest in a line of government actions seeking to gain control over what is often seen as the wild west of financial assets. Even though there is visible support from U.S. senators to fight such proposals, it’s often money that speaks the loudest. With a deficit expected to rise to $2.6 trillion by 2034, the U.S. government budget needs all the help it can get.
