The proposed 30% tax on electricity use for digital asset mining operations in the United States has raised concerns among crypto miners that they could be priced out of operating in the U.S. market. The proposed tax is part of the Biden Administration’s plan to reduce carbon emissions and increase revenue.
Crypto miners in the United States represent over 29% of the total nodes on the Bitcoin network. However, if the proposed tax is implemented, it could lead to a significant increase in costs for miners, making it difficult for them to operate in the U.S. market.
One of the emerging options for miners is the Middle East region, where taxes tend to be lower, energy is often bountiful, and environmental regulation is generally less onerous. The Oman government has invested over $800 million in crypto-mining operations, and the UAE’s 400 megawatts of Bitcoin mining is about 4% of the global Bitcoin mining hashrate.
Olivier Ohnheiser, CEO of Green Data City, an Oman crypto-mining firm, believes that the Middle East region has several advantages over the U.S. “Compared to the U.S., the south of Oman has a few geopolitical advantages that are unique. It is very good for connections, as it’s next to submarine cables landing. It has low [cost] electricity, reduced political risk, and favorable weather conditions for data centers,” he said.
The proposed tax has also raised concerns among miners that it could lead to a decline in the number of miners operating in the U.S. market. Kyle Shneps, Director of Public Policy at Foundry, a U.S.-based crypto mining firm, believes that the tax could “assuredly kill the industry in the United States.”
Darin Feinstein, founder of mining firm Core Scientific, also believes that the bill could hurt the U.S. economy. “This is a tax question I believe. I do not believe this has any likelihood of passing, but if it did it would simply weaken the American footprint on the most important asset in our lifetime. Investment and technology would simply leave our shores for more hospitable environments,” he said.
The proposed tax is not the only challenge facing miners. The recent Bitcoin halving in April has also reduced block rewards, making it more difficult for miners to operate profitably. Seyed Mohammad Alizadehfard (Bijan), Co-Founder and Group CEO at the Phoenix Group, believes that this could lead to a decline in the number of miners operating in the U.S. market.
However, not everyone is pessimistic about the future of digital asset mining in the U.S. Anthony Scaramucci, a former White House comms director and founder of Skybridge Capital, believes that the U.S. remains a hotbed for digital assets, including mining. “Despite regulatory uncertainty, the U.S. offers an ecosystem that is ripe for innovation and growth, with many of the leading crypto firms and projects already here,” he said.
If the proposed tax is implemented, U.S.-based miners have two options: cling to the U.S. market and make the numbers work, or find a new home.
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Source: Coindesk
