Bitcoin Mining Industry Spared From 30% Tax In US Debt Ceiling Deal

Bitcoin mining has recently been at the center of attention as a potential beneficiary in a crucial negotiation. Ohio Rep. Warren Davidson has revealed that a tentative deal, designed to prevent the United States government from defaulting on its debts, may bring relief to cryptocurrency miners. 

In particular, the deal is expected to scrap a proposed tax on the energy consumption of these miners. This development brings hope to the cryptocurrency community, as it could potentially remove a significant hurdle for Bitcoin miners and pave the way for continued growth and innovation in the industry.

Lawmakers Introduce Bill To Suspend US Debt Ceiling

In recent developments, US lawmakers unveiled a preliminary draft of a bill that seeks to address the pressing issue of the debt ceiling, a limit on the amount of money the government can borrow to fulfill its financial obligations. The bill comes after intense negotiations involving US President Joe Biden and House Speaker Kevin McCarthy. 

If passed, the proposed legislation would result in a two-year suspension of the debt ceiling, allowing the US government to continue borrowing money and meeting its financial commitments.

Biden had expressed a desire for the bill to include provisions for tax increases targeting corporations and high-income individuals. However, the latest draft suggests that these specific tax hikes are unlikely to be included in the final version of the bill. The absence of such tax increases could be seen as a concession made to gain broader support for the legislation.

BTCUSD backpedals to the $27K territory today. Chart: TradingView.com

Bitcoin Mining DAME Tax No More?

As a result of Biden’s and top Republicans’ agreement to prevent the US from defaulting on its debt, the White House’s proposal to levy heavy taxes on the Bitcoin mining sector appears to be dead in the water.

Davidson indicated on Sunday that the mining tax will not go into force, despite the White House not having provided any new updates on the tax idea.

For his part, Pierre Rochard, Vice President of Research at Riot Platforms, took to Twitter to raise concerns about the absence of any mention of Bitcoin mining in the draft bill titled the “Fiscal Responsibility 5 Act of 2023.”

Rochard’s tweet pondered whether this meant the proposed Administration’s Digital Asset Mining Energy (DAME) excise tax proposal had been discarded.

Davidson, in response, tweeted that one of the triumphs achieved was the prevention of proposed taxes on crypto.

Yes, one of the victories is blocking proposed taxes.

— Warren Davidson 🇺🇸 (@WarrenDavidson) May 29, 2023

30% Crypto Tax Still Up In The Air

The notion of implementing an energy tax for digital asset mining was initially introduced in March of this year. The DAME tax was intended to apply to both Proof-of-Work (PoW) networks like Bitcoin and Proof-of-Stake (PoS) networks like Ethereum, disregarding the substantial differences in their energy consumption levels.

The Biden administration stated that a 30% tax on cryptocurrency mining companies was necessary to reduce environmental and societal harms caused by crypto mining activities, and if the bill were to succeed, that tax would be imposed.

The legislative body is scheduled to convene and cast their votes on the proposed legislation on May 31.

-Featured image from Getty