- According to Senator Lummis, a 30% tax on Bitcoin mining could push the industry abroad.
- She cited the Laffer Curve to warn of lower tax revenues due to higher mining taxes.
On July 23, Senator Cynthia Lummis published a report challenging the Biden administration’s proposed 30% excise tax on the energy used by Bitcoin. [BTC] miners.
The Lummis report highlighted its potential negative impact “Switching Off Progress: Why a Bitcoin Mining Tax Will Hurt America,” noted,
“This move jeopardizes America’s hard-won leadership position and the future of Bitcoin mining in America.”
Senator Lummis argued that the proposed 30% tax on BTC mining energy could disrupt America’s fast-growing Bitcoin mining sector.
For context, following China’s ban on BTC mining in 2021, the US took advantage of this opportunity. The states attracted significant investment and talent, leveraging their strong energy market and legal framework.
As a result, many major Bitcoin mining operations are now based in the US
Cryptomining not a threat: Lummis
Lummis warned that this new tax could drive industry abroad, and suggested that the Treasury Department’s rationale for the tax reflects outdated perspectives on energy consumption and technological progress.
“It is now estimated that the US is responsible for more than 35% of the global BTC ‘hashrate’, a measure of the computing power devoted to mining.”
That being said, Lummis referred the Bitcoin Energy and Emissions Sustainability Tracker to argue that BTC mining is more environmentally friendly than often thought.
According to the tracker, as much as 52.6% of Bitcoin mining could be done with minimal or no emissions.
Source: Batcoinz
She added:
“The government’s proposal claims that Bitcoin mining creates “risks” for local utilities on their network operations. However, it does not support these claims. On the contrary, empirical evidence shows that Bitcoin mining strengthens US energy networks.”
The Laffer Curve Analysis
In the conclusion of her report, Lummis highlighted the principles of the Laffer Curve, which illustrated how higher tax rates could lead to lower overall tax revenues by discouraging economic activity.
Source: Report by Senator Cynthia Lummis
Lummins echoed the same and aptly summed up the situation with her comment when she said:
“If America fails to create a supportive and stable environment for Bitcoin mining, we risk squandering the benefits we currently enjoy and could find ourselves playing catch-up in a race we once had every chance to lead. ”