The US government is looking for ways to balance the shaky economy by injecting more money into the financial system. The US cryptomining community will likely burn this tax increase, as the US government has proposed increasing taxes on miners' electricity demand. The proposal was part of US President Joe Biden's annual budget speech on March 9. By reforming policies related to the cryptocurrency sector, the Biden administration hopes to generate $24 billion (approximately $1,96,700 million) in the US economy.
Electricity usage by crypto mining companies can now be as much as 30 percent of the total electricity used to facilitate mining in the United States.
While the adequacy of the US treasury is one of the main reasons for this proposal, the US wants to manage the additional environmental impacts of energy-intensive cryptocurrency mining.
"Companies that operate digital assets must report the amount and type of electricity used when purchased from abroad, as well as the cost of that electricity. And companies that produce or purchase energy from the grid, for example, a specific plant, companies that produce or purchase the cost of the electricity produced. .30 percent of the estimated value will be subject to excise tax and will be waived, according to a US Treasury official.
A special tax will apply to companies that gradually mine digital assets over a three-year period. It starts at 10 percent in the first year, 20 percent in the second year and then 30 percent.
Crypto mining is the process of creating new crypto tokens. Miners must solve complex algorithms to verify transactions on the blockchain and generate new tokens as rewards and byproducts.
Before 2021, China will emerge as a center for crypto mining. After China imposed a blanket ban on all crypto activity in September 2021, miners flocked to Kazakhstan, Russia, and El Salvador, as well as other lucrative locations, including Texas and New York.
Last year, the United States was named the world's largest Bitcoin mining hub by Cambridge researchers. By 2021, cryptocurrency mining activity in the United States will account for 37 percent of global hashrate.
With the job opportunities created by the crypto-mining business, the US state of Kentucky has begun evaluating affordable ways to generate electricity to support the mining industry.
"A special tax on the use of electricity by miners for digital assets could reduce mining activity with environmental impacts and other damages. The increase in energy costs associated with the increase in digital asset mining has negative environmental impacts, in addition to increasing energy costs. Those with miners Power grid of digital assets for them by sharing,” said the US government.Cryptocurrency mining business.
The rule is expected to come into effect next year.