Sen. Cynthia Lummis (R-Wyo.) said she thinks the proposed Digital Asset Mining Energy (DAME) tax constitutes unfair targeting of the digital asset industry.
"A 30% tax hike on any specific industry is a blatant attempt by the administration to pick winners and losers. I will not let President Biden tax the digital asset industry out of existence,” Lummis said in a May 25 tweet.
The White House's Council of Economic Advisors (CEA) stated in a May 2 blog that the proposed 30 percent tax, which is included in President Joe Biden's fiscal year 2024 budget, is “an example of the President’s commitment to addressing both long-standing national challenges as well as emerging risks – in this case, the economic and environmental costs of current practices for mining crypto assets (cryptomining, for short).”
The CEA explains cryptomining as "a process for validating transactions among holders of crypto assets to record and transfer cryptographically secured assets on a distributed ledger by, for example, using computing equipment to perform calculations," which requires vast amounts of electricity.
The CEA states the "intensive and often volatile power consumption also can push up electricity prices for consumers and can increase risks for local electrical grids — straining equipment, causing service interruptions and safety hazards," and cites New York Times reporting that found the amount of power usage associated with 34 large cryptomining firms as "equal to the power used by the surrounding 3 million homes."
The CEA alleges that cryptominers are not adequately paying for “the full cost they impose on others,” including in environmental pollution and greenhouse gas emissions. Under the tax proposal, after a phase-in period, cryptominers would face a tax equal to 30 percent of the cost of the electricity they use in cryptomining, according to the CEA.
The CEA acknowledges the DAME tax could result in cryptominers moving abroad, the blog post states. It also notes other countries have restricted or banned cryptomining, including China, which banned the practice in 2021.
However, Lummis said at the recent Bitcoin 2023 conference in Miami that the DAME tax "isn’t going to happen," Decrypt reported May 19. In an interview with Chamber of Digital Commerce founder and CEO Perianne Boring, Lummis said that maintaining the U.S.’ position as a global hub for cryptomining is a matter of national security as well as energy security.
“One of the things that is holding back our ability in Congress to legislate in this area is the fear that Bitcoin and cryptocurrencies are being used for criminal activities,” Lummis said. She encouraged cryptocurrency proponents to join advocacy groups and contact their government representatives.
Lummis said also that "Bitcoin is cleaning up the environment,” according to the Decrypt article, claiming that cryptominers can use excess energy produced.
Gregory Gosson wrote for Bitcoin News that the DAME tax’s environmental argument fails to hold up, because it would prevent cryptominers from participating “in the grid-stabilizing programs they currently partake in.” Gosson wrote that cryptominers would be taxed even for energy that would otherwise be wasted.
In the article Gosson referred to Satoshi Action Fund CEO and co-founder Dennis Porter's comment that the White House’s proposed 30 percent tax would result in the United States losing its position as the global leader on Bitcoin mining and thus "lose out on the future growth of this evolving tech industry.”
Andrew Bailey, a fellow at the Bitcoin Policy Institute, said in a tweet that it is “incoherent” for the administration to want to tax certain types of energy usage, rather than targeting certain types of energy.
"This is a mess of an argument,” he said in his tweet.
