US debt dispute: Is the mining tax now off the table?

A bill by U.S. President Joe Biden and Kevin McCarthy should save the country from bankruptcy. Is the controversial crypto tax now off the table?

The US will run out of money on June 1, 2023: That's what US Treasury Secretary Janet Yellen predicted just a few days ago. The United States has reached its debt ceiling. Politicians must take urgent action. Progress so far: a bill by President Joe Biden and Republican opposition leader McCarthy. It is also relevant to the crypto industry. Because a tax on cryptominers proposed by the Biden administration could become a thing of the past with the draft. At least that's what crypto companies hope. They cling to the quote from a U.S. congressman.

30 percent mining Tax blocked?

The U.S. is the country with the largest mining industry in the world. According to Cambridge University data, they provide about 38 percent of the Bitcoin network's total mining computing power. This requires a lot of electricity. The Biden administration announced plans back in March to impose a 30 percent tax on electricity for mining crypto. The government wants to limit the environmental and social damage of crypto mining (here is the link to the proposal).

Biden and McCarthy's plan is relatively simple: raise the debt ceiling and cut government spending. If passed, the current debt ceiling would be lifted until 2025. Government spending must not exceed the level of the current fiscal year in the coming year and may only increase by one percent in 2025. Defense spending is exempt from the rule.

However, there is no trace of a mining tax in the bill, called the "Fiscal Responsibility 5 Act of 2023." For U.S. Congressman Warren Davidson, this is certainly a sign that the crypto tax has come to an end. This question was raised by the vice president of one of the largest U.S. mining companies ever: Pierre Rochard, of Riot Platforms. On Twitter, he wrote: "I searched the document, there is no mention of Bitcoin mining. Does this mean the government's DAME excise tax proposal is off the table?". To this, Davidson replied unequivocally. "Yes, one of the successes is avoiding the proposed taxes." A statement that gives U.S. miners hope. After all, a 30 percent tax would leave many companies uncompetitive.

What happens next?

However, the situation is not yet very clear. With the debate over the new law, US politicians have other concerns than the tax on power for the mining industry for now. Following the panic reactions to her forecast, Janet Yellen again pushed back slightly (to June 5) the "Day-X" on which the US would be declared bankrupt.

Now both chambers of Congress must first approve the deal. The Senate, controlled by Biden's Democrats, and the House of Representatives, controlled by the Republicans. The president urged a quick decision: "I urge both chambers to approve the deal immediately."

Even if the bill is passed in a similar form, it does not mean that a fundamental discussion about the taxation of the U.S. mining industry will come to a halt. However, given the urgency of the current impending bankruptcy, this issue plays a minor role. In any case, the plans have been omitted from the current draft. A congressional vote is scheduled for May 31. Experts estimate that a decision by the Senate and House of Representatives cannot be expected until the weekend at the earliest. And that's only provided there is no opposition in the votes.