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White House Proposes 30% Digital Asset Mining Energy (DAME) Excise Tax
The White House | May 2, 2023
New proposal in this year’s Budget, the Digital Asset Mining Energy (DAME) excise tax to balance the economic and environmental costs of cryptomining where after a phase-in-period, firms would face a tax equal to 30 percent of the cost of the electricity they use in cryptomining.
- Currently, cryptomining firms do not have to pay for the full cost they impose on others, in the form of local environmental pollution, higher energy prices, and the impacts of increased greenhouse gas emissions on the climate. The DAME tax encourages firms to start taking better account of the harms they impose on society.
See: B.C. Government Temporarily Suspends Requests for Electricity Connetions from Crypto Miners
- While crypto assets are virtual, the energy consumption tied to their computationally intensive production is very real and imposes very real costs, as highlighted in a chapter of this year’s Economic Report of the President. The amount of electricity used in cryptomining in the United States in 2022 was similar to what is used to power all the country’s home computers or residential lighting.
- Cryptomining activities pose significant environmental, social, and economic concerns due to their high energy consumption and negative spillover effects (OSTP 2022).
- Low-income neighborhoods and communities of color disproportionately bear the burden of pollution from electricity generation (Thind et al. 2019).
- The unpredictable power demands of cryptomining can lead to increased electricity prices, strained electrical grids, and potential safety hazards (Chelan County 2018).
- The geographically mobile nature of cryptomining further exposes local utilities to financial risks associated with capacity investments that may become unnecessary.
See: Canada: Release Of Draft Tax Legislation For Consultation including GST/HST for Crypto Mining
- China banned such activity completely in 2021, as have eight other countries;
- Three Canadian provinces also have announced or enacted cryptomining moratoriums.
- Some U.S. States and localities are now charging higher electricity prices for or restricting the activity.
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