The alpha:
- A recent bipartisan agreement on the US debt ceiling could sidestep several proposed tax increases, including the Digital Asset Mining Energy (DAME) tax that would have placed a 30 percent tax on energy use by cryptominers.
- Despite the progress and confidence of President Joe Biden, the deal has yet to be approved by the House of Representatives and Senate.
Dive deeper
The crypto mining industry could face a serious reprieve this week as a tax bill targeting energy consumption appears to be shelved. The move follows a bipartisan deal on the US debt ceiling that appears to defeat several proposed tax increases, including the controversial DAME excise.
The agreement, made between President Biden and senior Republican leadership, including House Speaker Kevin McCarthy, aims to avoid a potential default on the US government’s debt. The prospective legislation, called the Fiscal Responsibility 5 Act of 2023, is a 99-page bill that serves to suspend the country’s debt limit until 2025, bypassing a federal default while also placing limits on government spending.
On May 28, Ohio Rep. Warren Davidson revealed on social media that the deal would likely negate the proposed 30 percent tax on energy used by cryptocurrency miners.
Yes, one of the victories is blocking proposed taxes.
— Warren Davidson
(@WarrenDavidson) May 29, 2023
The tax, which was initially proposed as part of the DAME bill, has been a point of contention among major blockchain industry players and lawmakers. It proposed an initial 10 percent tax on the electricity used by Bitcoin and other crypto miners starting in 2024, gradually rising to 30 percent by 2026, with the goal of generating an estimated $3.5 billion in revenue over 10 years. to generate.
However, the proposed tax faced significant backlash from those inside and outside the crypto industry. Critics, including the Democratic presidential nominee Robert F. Kennedy Jr. and Republican Senator Cynthia Lummisdisputed that it was an environmental argument apparently a pretext to suppress a thriving industry and undermine both national security and energy security.
While blockchain mechanisms, especially in the case of proof-of-work systems such as Bitcoin (and pre-merge Ethereum), are undeniably energy-intensive, proponents argue that the industry is largely dependent on renewable energy, reducing its environmental impact. is compensated. While some remain steadfast in their concerns about Ordinals Inscriptions, which continue to draw users to BTC in hopes of joining the exponential growth of the Bitcoin NFT ecosystem.
What’s next?
Despite this promising development, the debt ceiling agreement is far from a foregone conclusion. It continues to be thoroughly scrutinized and debated in both the House of Representatives and the Senate before it can go into effect.
Still, the current US administration appears to have confidence in the agreement. In a public statement, President Biden acknowledged the nature of the agreement as a compromise. “The agreement prevents the worst possible crisis: a payment default for the first time in the history of our country,” he said.
All in all, those on the creative and technical side of Web3 will no doubt be keeping a close eye on the progress of the agreement, as the outcome will undoubtedly have far-reaching implications for the future of the blockchain industry in the United States.
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Editor’s Note: This article was written by an nft now contributor in collaboration with OpenAI’s GPT-4.
