Cynthia Lummis recently released a report opposing the Biden administration’s proposed 30% excise tax on the energy consumed by Bitcoin miners. Lummis argues that this tax could have severe repercussions on the growing Bitcoin mining industry in the U.S. She believes that the concerns about environmental pollution and risks to the energy grid are unfounded and that the tax should be rejected.
Lummis warns that implementing this tax could drive Bitcoin mining operations overseas to more favorable jurisdictions, similar to what happened after China banned Bitcoin mining. The primary cost in Bitcoin mining is energy, and even small tax increases could be devastating. If the U.S. imposes a blanket tax on Bitcoin mining, there is a risk of losing economic benefits and job opportunities for American communities.
Contrary to claims by the administration that Bitcoin mining risks local utilities and grid operations, Lummis argues that miners can actually strengthen energy grids. Miners have shown the ability to quickly adjust energy use to balance supply and demand, preventing blackouts. In Texas, Bitcoin miners worked with ERCOT to stabilize the grid during peak demand, showcasing their ability to contribute positively to the energy infrastructure.
Bitcoin mining facilities, like electric vehicles, are fully electric and increasingly use cleaner energy sources. Studies have shown that a significant portion of the energy used by Bitcoin miners is emission-free and improving over time. Bitcoin mining could even be more effective in restoring grid frequency during disasters compared to current technology. Lummis emphasizes the importance of studying the effects of rapid deployment of this technology and allowing it to mature instead of hindering its progress with aggressive taxes.
Lummis highlights the economic benefits of Bitcoin mining, especially for underserved areas. She notes that miners are lawful American businesses that pay taxes and contribute significantly to community development, particularly in rural or economically depressed regions. By imposing a heavy tax on Bitcoin mining, there is a risk of stifling economic growth and depriving these communities of valuable opportunities.
The proposed excise tax on energy consumed by Bitcoin miners has sparked a heated debate, with Cynthia Lummis leading the opposition against it. The potential negative effects of this tax, such as driving mining operations overseas and hindering the industry’s growth, must be carefully considered. Additionally, the role of Bitcoin mining in strengthening energy grids and its environmental benefits should not be overlooked. It is crucial to weigh the economic benefits of Bitcoin mining for underserved areas against the perceived risks and implications of imposing a 30% excise tax.