Market Analysis Report (03 May 2023)

In a bid to address the societal and environmental impacts of cryptocurrency mining, President Joe Biden's administration is proposing a targeted tax on the industry, according to a post on the White House's Council of Economic Advisers (CEA) blog.

The suggested tax, dubbed the Digital Asset Mining Energy tax, would be equivalent to 30% of a mining company's energy costs, potentially cutting into the profitability of such businesses. The CEA post argues that cryptocurrency mining operations do not currently bear the full cost of their impact on the environment and local communities.

This impact, it argues, includes pollution, higher energy prices, and increased greenhouse gas emissions. The CEA argues other energy-intensive industries wouldn’t be hit with the new tax, as it contends that crypto mining “does not generate the local and national economic benefits typically associated with businesses using similar amounts of electricity.”

If implemented, the tax is expected to generate up to $3.5 billion in revenue over the next decade. Major U.S. mining companies that would be affected by the tax include Riot Platforms (RIOT), Marathon Digital (MARA), Cipher Mining (CIFR), Greenidge Generation (GREE), BitDeer (BTDR), and CleanSpark (CLSK).

In March, the administration's Council of Economic Advisers also published a report highlighting broader concerns with the cryptocurrency mining industry.

The proposed tax is likely to face opposition in the Republican-controlled House, as Congressional Republicans have in the past resisted attempts to impose penalties on the crypto sector.

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• Source: https://www.cryptocompare.com/email-updates/daily/2023/may/03/