The US will run out of money on June 1, 2023: That was just a few days ago forecast by US Treasury Secretary Janet Yellen. The United States has reached its debt ceiling. There is an urgent need for action in politics. The progress so far: a draft law by President Joe Biden and Republican Opposition Leader McCarthy. It is also relevant to the crypto industry. Because a tax on crypto mining proposed by the Biden government could have been done with the draft. The crypto companies hope so. They cling to a quote from a US Congressman.
30% mining tax blocked?
The USA is the country with the world’s largest mining industry. Loud Data at the University of Cambridge, they provide around 38 percent of the total mining computing power of the Bitcoin network. A lot of electricity is needed for this. The Biden administration announced plans back in March to tax mining electricity at 30 percent. The government wants to limit the ecological and social damage of crypto mining (here is the link to the suggestion).
Biden and McCarthy’s plan is relatively simple: raise the debt ceiling and cap government spending. If passed, the current debt limit would be lifted by 2025. Government spending in the coming year must not exceed the level of the current budget year and may only increase by one percent in 2025. Defense expenditures are excluded from the regulation.
However, there is no trace of a mining tax in the draft law, which is referred to as the “Fiscal Responsibility 5 Act of 2023”. For US Congressman Warren Davidson, this is a sure sign that the crypto tax has come to an end. This question was asked by the Vice President of one of the largest US mining companies: Pierre Rochard, from Riot Platforms. On he wrote on Twitter. “I searched the document, there is no mention of bitcoin mining. Does this mean the administration’s DAME excise tax proposal is off the table?”. Thereupon answered Davidson clearly. “Yes, one of the successes is the prevention of the proposed taxes”. A statement that gives US miners hope. Because with a 30 percent tax, many companies would no longer be competitive.
However, the situation is not that clear. With the debate about the new draft law, US politicians have other concerns than the taxation of mining electricity. After the panicked reactions to her forecast, Janet Yellen has corrected the “X-day” on which the USA will become insolvent a little further back (to June 5).
Now the two chambers of Congress have to approve the deal. The Senate controlled by Biden’s Democrats and the House of Representatives controlled by Republicans. The President urged a quick decision: “I urge both houses to pass the agreement immediately.”
Even if the bill is passed in a similar form, that does not mean that a fundamental discussion about taxing the US mining industry will come to an end. However, given the urgency of the current threat of insolvency, this question plays a subordinate role. In any case, the plans are left out in the current draft. A congressional vote is scheduled for May 31. Experts estimate that a decision by the Senate and House of Representatives is not expected before the weekend at the earliest. And that only on the condition that there is no resistance to the votes.
The latest issues of BTC-ECHO Magazine
You might also be interested in this