The cost of operating crypto mining operations would be subject to a 30% excise tax, according to the U.S. Treasury Department’s proposal. The “Greenbook,” the department’s list of tax ideas and justifications for the president’s budget proposal, contains a provision that would impose a progressively increasing excise tax on businesses using computing resources to mine cryptocurrencies, based on the price of the electricity used in that process.
These businesses would furthermore need to disclose how much electricity they consume and what kind of power was used. For the next three years, a 10% annual increase would be added to the tax. The clause specifically argues that this kind of tax may result in fewer mining machines overall in the United States.
According to the document, the rise in energy consumption caused by the expansion of digital asset mining has detrimental effects on the environment, may have an impact on environmental justice, and may also raise energy costs for people who live near digital asset miners who use the same electricity grid. While mining activity is very unpredictable and mobile, the study also claims that it poses dangers and uncertainties to local utilities and people.
On Thursday, U.S. President Joe Biden published his budget plan for 2024, emphasising a different clause that would remove a tax code loophole known as the “wash sale” loophole. The change would prevent people from selling digital assets at a loss, recording that loss when they pay their taxes, and then immediately purchasing the identical assets again in order to maximise their tax losses.
Together with a third cryptocurrency-related proposal that would broaden the securities lending regulations to cover digital assets, this clause was referenced in the greenbook.
As per the proposal, the securities loan nonrecognition requirements would be changed to apply to loans of actively traded digital assets recorded on cryptographically secure distributed ledgers as long as the loan contains terms identical to those presently needed for loans of securities.
Moreover, the proposal suggests including overseas account-holders in the information reporting guidelines as part of the government’s continuous information-sharing efforts on financial brokers, citing the 2021 Infrastructure Investment and Jobs Act’s crypto tax reporting clause. A fifth clause would mandate that individuals with international financial accounts disclose crypto assets of at least $50,000 in tax returns. In a sixth provision,