Mar 10, 2023
Biden Proposes 30% Tax on Crypto Mining Electricity
President Joe Biden’s proposed budget could soon see crypto miners in the United States subject to a 30% tax on electricity costs. According to a Department of the Treasury supplementary budget explainer paper released on March 9, any firm using resources — whether they be owned or rented — would be “subject to an excise tax equal to 30 percent of the costs of electricity used in digital asset mining.”
The tax would be phased in over three years, starting at 10% in the first year and increasing to 30% by the third year. Crypto miners would be required to report the amount, type and value of electricity used, as well as any off-grid electricity costs estimated from any “electricity generating plant.”
The Treasury cited negative environmental effects, increased prices for those sharing a grid with the operations, and “uncertainty and risks to local utilities and communities” as the reasoning behind the proposed tax.
The White House also confirmed reports that it’s looking to end a tax strategy for crypto transactions which it estimates would raise $24 billion. Currently, crypto investors are able to sell digital assets at a loss for tax purposes — known as tax-loss harvesting — and then immediately buy back those cryptocurrencies. The new rules would bring crypto trading tax rules in line with stocks, where such a practice is not permitted under wash sale rules.
The proposed tax and new rules could have a big impact on the web3 space, where non-fungible tokens (NFTs) are becoming increasingly popular. The rise of NFTs has led to an increased demand for crypto miners, as well as the need for NFT marketing and promotion.
As such, the proposed 30% tax on electricity costs could lead to an increase in the cost of NFT promotion and marketing campaigns. This could mean that NFT projects have to look for more cost-effective solutions, such as using Twitter NFT marketing and hiring a web3 agency to handle their NFT promotion and marketing needs.
A web3 agency would be able to provide a range of services, from helping to create an effective NFT marketing strategy to helping to sell NFTs. They could also provide advice on how to create an effective NFT promotion campaign that reaches the right audience.
It remains to be seen how this proposed tax will affect the web3 space, but it’s clear that any increase in the cost of NFT promotion and marketing could have a significant impact on the industry.
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