Biden proposes 30% tax on crypto mining
Biden’s 2025 budget proposal, which includes raising the corporate tax rate to 28% and imposing a 30% excise tax on electricity used for crypto mining, is prompting debate over both economic impact and climate policy. Commenters argue over whether higher corporate taxes are really passed on to consumers, how an electricity-based mining tax could be enforced, and whether it would simply push mining operations offshore. Broader questions surface about treating proof-of-work crypto as a wasteful luxury to be discouraged—possibly in favor of proof-of-stake or other uses of excess energy—versus seeing it as a legitimate, self-sustaining industry that should not be singled out.
Corporate Tax Increases & Incidence
- Debate over whether higher corporate taxes are “passed on” to consumers.
- Some argue profit taxes don’t mechanically translate to higher prices because firms still maximize profit at the same demand-determined price.
- Others say in practice tax hikes act as a coordination signal for industry-wide price increases and ultimately reduce investment returns and competitiveness.
- Disagreement over statutory vs. effective corporate tax rates; some note the U.S. effective rate is around the OECD average, so a higher statutory rate may not be as extreme as claimed.
Crypto Mining Electricity Tax: Fairness & Enforcement
- Proposal: 30% excise tax on electricity used for digital asset mining.
- Critics see this as arbitrary and “ridiculous,” asking why other “wasteful” luxuries (yachts, jewelry, meat, private jets) are not similarly targeted.
- Supporters reply that such luxury or targeted taxes already exist or are reasonable policy tools.
- Enforcement questions: how to attribute electricity when mining is mixed with other workloads; suggestions that regulators would use accounting records and broad rules, not perfect technical measurement.
Environment, Externalities & Bans
- Some say crypto mining should be outright banned due to environmental harm, calling proof-of-work “planet burning” and a pure waste since total block output is independent of energy spent.
- Others counter that all currencies are socially constructed, and electricity use is justified if the system is more valuable than the power consumed.
- Argument that negative externalities of electricity should be handled via general carbon/energy taxes, not crypto-specific penalties.
Grid Stability & “Flexible Load” Argument
- Pro-mining voices claim mining can stabilize grids by acting as instantly curtailable load, especially for renewables and stranded or overproduced power.
- Examples given of miners funding substation upgrades and being paid to shut down during peaks; critics call this extortion and say better uses (e.g., desalination) exist, though those are less portable and financeable.
Offshoring & International Policy
- Many note the tax would likely push mining offshore, reducing U.S. grid demand but not global emissions.
- Some see this as still a win for the U.S.; others prefer bans plus letting other countries bear the “dead weight loss.”
- Parallel drawn to carbon border adjustment mechanisms as a way to export environmental standards.
Crypto vs. Fiat & Purpose of Crypto
- Disagreement on why crypto exists:
- One side cites hyperinflation and desire to escape government-controlled money; others say the original Bitcoin paper focused on trustless, irreversible online payments.
- Critics argue crypto is “more fiat than fiat,” with no link to real-world value and high energy destruction; defenders highlight fixed supply and use in failed-currency contexts.
Alternative Policy Ideas & Meta
- Some suggest a general carbon tax/credits system would be cleaner than targeted crypto taxes.
- Discussion notes that the linked source is not viewed as neutral, and that the HN submission title was more editorialized than the article’s actual title.