Proposed US 30% Crypto Mining Tax Reportedly Axed With Debt Ceiling Deal

The United State House of Representatives has reportedly excluded the proposed controversial Digital Asset Mining Energy (DAME) 30% tax from the recent Fiscal Responsibility bill, sparking a great buzz and acceptance in crypto mining communities.

DAME Missing in New Bill

On May 28, the United States House of Representatives released a legal bill of rights cited as the ‘‘Fiscal Responsibility 5 Act of 2023’’ to enable the government to increase its debt ceiling.

#DebtLimit Here’s the bill text. What are your thoughts?https://t.co/EkVwbU5RQL

— Warren Davidson (@WarrenDavidson) May 29, 2023

However, a significant part of the deal has axed some taxes proposed by President Joe Biden, including the Digital Asset Mining Energy (DAME) tax.

Congressman Warren Davidson confirmed the absence of the DAME tax from the drafted Fiscal Responsibility 5 Act of 2023 bill in response to Pierre Rochard’s, the Vice President of Research at Riot Blockchain, comment on the mining law exclusion.

Yes, one of the victories is blocking proposed taxes.

— Warren Davidson (@WarrenDavidson) May 29, 2023

President Biden floated The DAME tax on May 2nd. The mining bill entails a 10% tax on electrical power used by Bitcoin and other cryptocurrency miners.

Although the bill was proposed to take effect in 2024, it had contingencies that could span from an initial 10% tax to 30% by 2026.

According to the White House public statement, the DAME tax exercise proposal is strictly geared at making crypto miners in the United States pay for costs imposed on other power users.

These costs range from environmental and societal damage to electricity consumption caused by mining operations.

While it may seem that the mining tax has been permanently excluded, it is worth noting that Congressman Warren Davidson’s tweet response to Pierre Rochard did not explicitly mention the exclusion of the Bitcoin tax.

Furthermore, the drafted bill of rights by the U.S. lawmakers is pending approval to avert an economic crisis for the country.

Under the proposed bill, there would be an effective suspension of the debt ceiling, allowing the government to borrow more funds and settle pre-existing and new debts.

Although the draft was supposed to include tax increases for high-income individuals, corporations, and cryptocurrency miners, the recently drafted bill of rights document suggested this was unlikely.

Digital Asset Mining Energy Tax Impact on Crypto Communities

The DAME tax proposal was made public on May 2, 2023. The new proposed tax law aims to effectively address the high consumption associated with mining digital assets.

Already, the U.S. Department of Treasury had earlier stated that the increased consumption had adverse environmental and societal effects on residents of the country.

Concerns were also raised about the potential increase in energy prices for residents sharing electricity grids with mining industries, posing threats to communities.

While these benefits could be promising, the DAME tax has received backlash from crypto communities and reputable experts such as the 2024 U.S. Presidential candidate Robert Kennedy Jr. who aired his disagreement on Twitter.

Cryptocurrencies, led by bitcoin, along with other crypto technologies are a major innovation engine. It is a mistake for the U.S. government to hobble the industry and drive innovation elsewhere. Biden’s proposed 30% tax on cryptocurrency mining is a bad idea.

— Robert F. Kennedy Jr (@RobertKennedyJr) May 3, 2023

U.S. Senator Cynthia Lummis also voiced strong opposition, emphasizing that energy efficiency standards must not be used to target specific energy use cases like digital asset mining.

DAME 30% Tax exclusion Influences $BTC Price Increase

The cryptocurrency markets, as expected, reacted favorably to the exclusion of the DAME tax law development, with $BTC recording a 7% increase before Monday markets.

According to CoinMarketCap $BTC data, the digital asset price opening for May 28 was $26,871.

After news of the removal of the Bitcoin mining tax law from the drafted Fiscal Responsibility 5 Act of 2023 bill, the $BTC price increased to $28,193.

Crypto communities argue that the tax law would be destructive to decentralized finance in the US, making its exclusion a victory for the continuous growth of the digital asset space.

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