TL;DR
- The U.S. Department of Energy announces an urgent review of cryptocurrency miners’ activity in response to Bitcoin’s recent price surge.
- The review aims to understand the evolution and geography of crypto mining energy consumption, demanding detailed data from companies.
- President Biden proposes the DAME Tax, a 30% tax on the electricity expenses of crypto miners.
The recent surge in Bitcoin prices caught the attention of the U.S. Department of Energy, which announced an emergency review of cryptocurrency miners. The Energy Information Administration (EIA) reported that the Office of Management and Budget authorized this survey, categorizing it as an “emergency data collection” set to begin next week.
This initiative is a response to the significant growth in crypto mining, partly driven by the increase in Bitcoin prices. Under this emergency review, cryptocurrency mining companies will be required to provide detailed documentation of their energy consumption. The main goal is to understand how the energy demand for mining is evolving, identify geographic areas of high growth, and quantify the sources of electricity used to meet this demand.
Joe DeCarolis, EIA administrator, emphasized the importance of understanding the impact of mining on energy consumption. The aim is to determine how growth in this activity can further incentivize mining, thereby increasing electricity consumption. Additionally, the EIA aims to gather public feedback on collecting data on energy usage by miners.
Joe Biden Seeks to Impose the DAME Tax, a 30% Tax on Bitcoin Miners’ Electricity Consumption
This review is part of the U.S. government’s aggressive approach to quantify electricity usage in the crypto industry. After China banned this practice in 2021, the U.S. became a major destination for miners. However, the constant and growing increase raised concerns about the industry’s energy appetite and potential environmental impacts.
A significant precedent is the 2022 congressional hearing that investigated energy usage and fossil fuel dependence in cryptocurrency mining. This led to the introduction of the Crypto-Asset Environmental Transparency Act in 2022. A year later, the bill was reintroduced in Congress, prompting the Environmental Protection Agency to continue investigating emissions related to mining.
Additionally, President Joe Biden proposed fiscal measures, such as the DAME Tax, involving a 30% tax on the electricity expenses of crypto mining companies. These actions reflect the growing government crackdown. In addition to regulatory pressure, it appears they aim to exert further influence through fiscal and tax pressure.
In terms of figures, according to the Cambridge Bitcoin Electricity Consumption Index, Bitcoin miners consumed 121.13 terawatt-hours of energy globally in 2023, marking an all-time high comparable to Belgium’s entire electricity consumption.
Furthermore, projections from the International Energy Agency suggest that cryptocurrency’s energy demand could reach 160 terawatt-hours by 2026. While finding a transition to more sustainable mining is important, doing so in an organized and mutually agreed-upon manner is crucial, rather than through stricter impositions and regulations
