- Senator Lummis criticizes 30% tax on Bitcoin mining, warns it could push industry out of U.S.
- The U.S. attracted significant investment in Bitcoin mining following China’s ban, strengthening its leadership in the sector.
Senator Cynthia Lummis released a report on July 23 criticizing the Biden administration’s proposal to implement a 30% tax on Bitcoin [BTC] miners’ energy consumption. This tax, according to Lummis, could push the industry out of the United States.
Reactions to the Tax Proposal
The report, titled “Powering Down Progress: Why A Bitcoin Mining Tax Hurts America,” argues that this measure would jeopardize the leadership position the United States has achieved in the Bitcoin mining sector, especially after China banned the activity in 2021. Since then, the United States has attracted investment and professionals in the sector, taking advantage of its robust energy market and favorable legal framework.
“This move endangers America’s hard-won leadership position and the future of Bitcoin mining in America.”
Cryptocurrency Mining Not a Threat According to Lummis
Lummis counters the Treasury’s justification for the tax, which is based on outdated perspectives on energy consumption and technological progress. According to the “Bitcoin Energy and Emissions Sustainability Tracker,” as much as 52.6% of Bitcoin mining could be done with minimal or no emissions .
“The U.S. is now estimated to account for more than 35% of the global BTC “hashrate,” a measure of the computing power dedicated to mining.”
Lummis argues that, far from posing a risk, Bitcoin mining strengthens U.S. energy grids.
Laffer Curve Analysis
The senator concludes her report with a reference to the Laffer Curve, which suggests how higher tax rates could decrease total tax revenues by discouraging economic activity.
In Lummis’ words, if the U.S. does not create a stable and favorable environment for Bitcoin mining, it could lose its competitive edge and be forced to make up ground in a race it once led.
“The administration’s proposal claims that Bitcoin mining creates “risks” with local utilities on their grid operations. However, it provides no support for these claims. To the contrary, empirical evidence shows Bitcoin mining strengthens America’s energy grids.”
