Topic: Biden proposed 30% mining tax. what would impact on Bitcoin mining? (Read 574 times)

There's no really viable alternative for Bitcoin, unfortunately.

and what would that something be exactly? isn't that the problem that there isn't really a good candidate for that? change bitcoin from Proof of Work and it really isn't bitcoin anymore. Because that would require a hard fork for sure.

Considering that most countries are turning "green", it's likely PoW mining will be banned in the future. Maybe BTC will change its algo to something better than PoS without compromising decentralization?

I have witnessed it myself with all miners in Spain (big and small): back in 2017 the tax agency forced all miners to create a company or register as freelancers, which meant that they suddenly had to pay >300€/month regardless of their production just in order to be able to switch on their computer, plus between 25%-50% of their income in taxes every year. If we add the increase in the price of electricity to the equation, they simply killed Bitcoin mining in my country.

It is easy to expect that miners (at least the sizable ones) will leave the US in search of new countries with more favorable taxation. Obviously this could involve moving all the equipment to these countries

President Joe Biden's administration has imposed a 30% tax on bitcoin mining electricity use. Bitcoin mining was not very profitable even though this tax was not levied in the past. But what impact will the new electricity cost have on Bitcoin mining?

Will this additional electricity tax attract new miners to Bitcoin mining?

What will be the impact on hashpower for a 30% mining tax?

Even before the imposition of this tax, some mining companies were in losses.
What are the old mining companies thinking about this tax?

why would someone use bitcoin if they had to pay 30% tax on every purchase? that sounds like someone with a solution looking for a problem...

Take an example of Indian tax system. There were the first to levy tax slot of 30%. What is surprising is, this is not only for miners, this is basically for everything you do in association with the crypto. They still use crypto and nothing happened in terms of crypto economy.

Why not help miners within your country? I have always been curious why countries make learning and gathering information on subjects so hard that competitive countries get a head start.

Using btc mining profits to build solar arrays does not hurt the environment.

we have built three arrays with btc profits.

45k
115k
275k

comes to over 2 mega watts a day.

I should not be treated like a piece of shit coal based miner polluting like mad to burn coal.

I should pay -10% on my power bill and coal based miners should pay 30% on their bill.

Is it 3.5 cents per kilowatt hour or is it 9.3 cents? I am not sure what all-in energy cost means, if the tax is going to increase the cost from 0.6 cents to 3.5 cents where does the remaining 5.8 cents come from?

Anyway, 3.5 cents is way below average = great for mining, 9.3 cents is above average and terrible for mining.

as long as they have a predictable income that they know 100% sure they can pay for the power by using unrealized income then ok. but you don't go into a convenience store and eat a candy bar and then try and pay for it but then complain about the tax saying you can't afford it...


what's wrong with that?



yeah to kickstart a discussion. guess who created this thread. oops maybe it wasn't me this time.  

it's not a tax it would be an excise tax. get your facts straight...

buying a candy bar doesn't harm the environment and contribute to higher electricity prices for everyone and also contribute to global warming. you still pay sales tax on the candy bar but an excise tax ON TOP OF THAT would be unnecessary.

excise taxes really aren't taxes at all, they are penalties for doing something bad that contributes to negative outcomes in the real world. therefore if someone insists on doing that activity they should be responsible enough to pay up for the damages they are causing don't you think?

A typical company earns BTC to pay for the power.

In this case it simply increases your electricity cost by 30%, so decreases your profit, and increases tax revenue from you.

Read the topic:

Your philosophical opinions of types of taxes are not the topic.

It's a simple - more tax, less revenue directed at mining.

In Sweden, taxes will increase more. $0.0006 was a miner's paradise

Energy prices started to normalize in 2023, but the upcoming tax will likely stop any new investment in Sweden, which is currently home to about 150 megawatts (MW) of mining. The tax will increase from SEK 0.006 ($0.0006) to SEK 0.36 ($0.035) per kilowatt hour (kWh) starting July of this year, according to the financial budget published in November 2022.

Based on the average electricity prices last year, the tax hike could bring the all-in energy cost to $0.093/kWh, said Jaran Mellerud, senior analyst at mining services firm Luxor Technologies. A MicroBT Whatsminer M30s, a moderately efficient and commonly used machine, would be at break-even point given current market conditions, he said.
https://getblock.net/en/news/sweden-will-raise-the-electricity-tariff-for-miners-58-times/

Links please or it's just random Internet rambling...

Texas' anti-Bitcoin mining bill passed through Senate committee uncontested without a single opposition vote today. It is on the "uncontested" list, which means it has a 95%+ chance of passing the Senate. There is a possibility that Texas will become a global hub for mining.

The 30% is actually Biden's proposal, so it's a bit of a long question if it can be approved, I'm also sure that most of them will not agree with what Biden wants to happen.

That's a huge amount in fact, it seems like Biden wants to legally rob the people, the proposals he's making that are 30% are out of the question. Woe to those who will be hit when that becomes their law.

A typical company earns BTC to pay for the power.

It's a a standard govt double tax.

In this case it simply increases your electricity cost by 30%, so decreases your profit, and increases tax revenue from you.
Simple math.

A typical company earns BTC to pay for the power. It's a a standard govt double tax.
In this case it simply increases your electricity cost by 30%, so decreases your profit, and increases tax revenue from you.
Simple math.

Read the topic:

Your philosophical opinions of types of taxes are not the topic.

It's a simple - more tax, less revenue directed at mining.

it's not a double tax on bitcoin income. they would be taxing the electricity expense. not the income from mining. two different things.

so you're against paying excise tax for gasoline?

Biden proposed 30% mining tax

The 30% is actually Biden's proposal, so it's a bit of a long question if it can be approved, I'm also sure that most of them will not agree with what Biden wants to happen.

That's a huge amount in fact, it seems like Biden wants to legally rob the people, the proposals he's making that are 30% are out of the question. Woe to those who will be hit when that becomes their law.

Standard govt double dipping scam.

You pay tax on your bitcoin income but they wanna tax you twice on how you spend that already taxed bitcoin income.

Nothing new, hopefully it fails.

If I say it is unenforceable in a mixed use business it pretty much is.
If I say it is unenforceable in a small home with a few pieces of gear it is.

A) prove where the nicehash gear you rented was usa based = can not be done

B) prove the power used by the nicehash gear if you say it was usa based = can not be done.

So this is why the law will not be enforceable across the board.

if you file a tax return and report any type of mining then you would kind of be on the hook. so a business would need to lie to the IRS for it to not be enforceable...

they always put the IRS in charge of collecting this type of taxes on peoples tax returns. so yeah unless you're going to lie to the IRS and pretend like you're not mining bitcoin then as soon as you file a schedule C showing you're running some type of bitcoin mining (for profit or loss), they'll probably have a form to fill out for computing your excise tax. just how the IRS works.



keep the democrats in power and it might just happen eventually.  

unless bitcoin miners band together and try and fight it i don't see the general public getting too up in arms about it since bitcoin mining is such a niche thing and most americans have no idea about it and don't even care. but maybe some of the big bitcoin mining farms that opened up in texas or wherever else would put some money some good legal representation because if not then no one will.

It is pretty much not enforceable for smaller mixed use business.

or for a home owner.

Plus it likely won't pass.

If and that's a BIG 'if' it is passed, 1 immediate action will it being fought in the courts...

this is not a tax on profits it is a tax on the power cost.
so year 1  $10000 power cost becomes 11,000
year 2.     $10000 power cost becomes 12,000
year 3      $10000 power cost becomes 13,000

It is pretty much not enforceable for smaller mixed use business or for a home owner.

Plus it likely won't pass.

Bitcoin mining profitability is mostly seasonal with several factors determining the profitability such as Bitcoin Price, hash rate and the changes in Bitcoin transaction fees.

Will the 30% tax on Bitcoin mining work outside the US? 

Absolutely nothing, mining is not done only in the US. Also, not everyone in the US will stop mining because of the 30% mining tax

USA sucks to begin with in the first place.

. the best states do true net metering. 2 or 3 of them.

NJ does it due to all the midwest coal plants.

never heard of 1 for 1 swap. i always heard people saying you sell it to them for way less than they sell it back to you at. plus you can only offset your electricity bill you can never end up with a credit, that's what i heard too.

but when you do it that way, you would owe the excise tax when you get it back from the grid. everything you get from the grid would get taxed that 30%. but if you had a battery system it would still get taxed there's no way around paying the tax from your solar. you're still using it. you're just storing it somewhere before you use it. right?

it is 1 for 1 swap.

the 275 kwatt array uses 60 kwatts during sunlight and sends 215 kwatts to the grid.

the grid is a free battery. so when it gets dark they owe me the 215 kwatts .

there's people that do that?  but i guess that answers my question.

how do you figure that? unless you never buy it back from the grid to do any mining...but i would think you sell it for less than you pay for it. maybe time to have some battery storage. like a power wall.

yeah you can buy a dirty closed power plant burn dirty coal and mine with the power plant only attached. to your big ass mine.

even though you have an entire power plant it would be off the grid.

my solar is on the grid and net meters so i think all of my solar would be untaxed.

both of them need to be implemented. but i'd say the excise tax on power usage is the more important one. the only part i disagree with is someone that generates their own power being required to pay a tax on that. but maybe there is some rationale to it that i'm not getting...

I think the wash rule is more likely to be adapted than the power rule.

IMPOSE DIGITAL ASSET MINING ENERGY EXISE TAX Current Law
Current law does not provide tax rules specifically addressing digital assets, with the exception of certain rules relating to broker reporting and reporting of cash transactions.
Reasons for Change
Digital asset mining is a process for validating transactions among holders of digital assets to record and transfer cryptographically secured assets on a distributed ledger by, for example, using high-powered computers to perform calculations to select the validator.
The computational effort involved in mining can be substantial and can therefore require a correspondingly large amount of energy. The increase in energy consumption attributable to the growth of digital asset mining has negative environmental effects and can have environmental justice implications as well as increase energy prices for those that share an electricity grid with digital asset miners. Digital asset mining also creates uncertainty and risks to local utilities and communities, as mining activity is highly variable and highly mobile.
An excise tax on electricity usage by digital asset miners could reduce mining activity along with its associated environmental impacts and other harms.
Proposal
Any firm using computing resources, whether owned by the firm or leased from others, to mine digital assets would be subject to an excise tax equal to 30 percent of the costs of electricity used in digital asset mining.
Firms engaged in digital asset mining would be required to report the amount and type of electricity used as well as the value of that electricity, if purchased externally. Firms that lease computational capacity would be required to report the value of the electricity used by the lessor firm attributable to the leased capacity, which would serve as the tax base. Firms that produce or acquire power off-grid, for example by using the output of a particular electricity generating plant, would be subject to an excise tax equal to 30 percent of estimated electricity costs.
Except as otherwise provided by the Secretary, the term “digital asset” means any digital representation of value which is recorded on a cryptographically secured distributed ledger or any similar technology as specified by the Secretary.
The proposal would be effective for taxable years beginning after December 31, 2023. The excise tax would be phased in over three years at a rate of 10 percent in the first year, 20 percent in the second, and 30 percent thereafter.
71
General Explanations of the Administration’s Fiscal Year 2024 Revenue Proposals

MODERNIZE RULES, INCLUDING THOSE FOR DIGITAL ASSETS
APPLY THE WASH SALE RULES TO DIGITAL ASSETS AND ADDRESS RELATED PARTY TRANSACTIONS
Current Law
Section 1091 of the Internal Revenue Code disallows a loss from a sale of stock or securities if the same or substantially identical stock or securities are purchased within 30 days before or after the sale (a “wash sale”) unless the taxpayer is a dealer in stock or securities and the loss is sustained in the ordinary course of its dealer business. If the stock or securities are purchased at a price that differs from the sale price of the stock or securities sold, appropriate adjustments are made to the basis of the purchased stock or securities. The holding period for the purchased stock or securities takes into account the holding period for the sold stock or securities. As a result, the effect of the wash sale rules ordinarily is to defer the recognition of a loss until the taxpayer finally disposes of the stock or securities. The wash sale rules also apply to sales of stock or securities where the taxpayer enters into a contract or option to buy the same or substantially identical stock or securities within the 30-day window, and to certain short sales of stock or securities. The wash sales are intended to ensure that taxpayers cannot recognize losses without exiting their position in a loss asset for a meaningful period of time.
The Internal Revenue Service treats a loss from a sale of stock or securities by a taxpayer that causes its individual retirement account or Roth IRA to purchase substantially identical stock or securities within 30 days of the sale as subject to the wash sale rule.52
Except as otherwise provided by the Secretary or her delegates (Secretary), brokers who report gross proceeds and basis from the sale of stock or securities determine a customer’s adjusted basis without regard to the wash sale rules, unless the transaction occurs in the same account with respect to identical securities.
Reasons for Change
Taxpayers with loss positions in digital assets are engaging in transactions that would be subject to the wash sale rules if the digital assets were subject to section 1091. For example, a taxpayer may sell a digital asset that is not considered a stock or security for wash sale purposes at a loss on one day and repurchase the same digital asset the next day. The same loss recognition rules should apply to digital assets held as investments or for trading as would apply for stocks and securities.
The wash sale rules should also be updated to provide statutory rules addressing related party transactions, and to reflect new types of financial instruments that have developed since the last amendments made to those rules.
52 Revenue Ruling 2008-5, 2008-1 C.B. 271.
190
    General Explanations of the Administration’s Fiscal Year 2024 Revenue Proposals
Broker reporting rules should be amended to reflect these changes to the wash sale rules.
Proposal
The wash sales rules would be amended to add digital assets to the list of assets subject to the wash sale rules. Except as otherwise provided by the Secretary, the term “digital asset” means any digital representation of value which is recorded on a cryptographically secured distributed ledger or any similar technology as specified by the Secretary.53 Regulatory authority would be granted to the Secretary to treat any security as defined by section 475(c)(2), or any commodity as defined by section 475(e)(2), or other assets traded on an established market as subject to the wash sale rules as necessary to prevent abuse. The basis and holding period rules applicable to purchased assets would be revised to reflect the expanded scope of the wash sale rules. These expanded rules are not intended to apply to ordinary course business transactions. The Secretary would have authority to prescribe regulations defining the term ‘substantially identical” and to provide an exception to the application of the wash sale rules for ordinary course business transactions (not including trading) involving digital assets.
The wash sale rules, as they apply to all assets and not only digital assets, would be modified with respect to transactions involving related persons, except as otherwise provided in regulations prescribed by the Secretary. In the case of any loss from a sale of assets subject to the wash sale rules and a purchase by a related party of the same or substantially identical assets within 30 days of the sale, the loss would be deferred until the related party sells or otherwise disposes of the asset or such other time as specified by the Secretary, provided that the taxpayer and a related party do not reacquire the asset within 30 days before or after that sale or disposition, or the parties cease to be related. A related party would include members of a taxpayer’s family and tax-favored accounts such as individual retirement accounts controlled by the taxpayer or the taxpayer’s spouse. Two entities would be related to each other if one controlled the other, directly or indirectly, or both were under the common control of either a third entity or the taxpayer and one or more family members. An individual would be related to an entity if the entity is controlled, directly or indirectly, by the individual and the individual’s family members. The Secretary would have authority to issue regulations expanding this definition as necessary to prevent abuse, to provide rules for transactions where a taxpayer sold assets at a loss and both the taxpayer and a related party acquired the same or substantially similar assets, and to coordinate the operation of the wash sale rules with other rules dealing with sales of loss property between related parties (sections 267 and 707).
The wash sale rules also would be amended to address derivative financial instruments more comprehensively, including modifications to the basis rules to prevent abuse.
The Secretary would have authority to require brokers to report such information as may be necessary or appropriate to implement the wash sale rules. Except as otherwise provided by the
53 This definition is the same as that provided in section 6045(g)(3)(D). It is intended that the Secretary may exercise her authority to provide that the term “digital asset” has a meaning for wash sale purposes that is not identical to its meaning for purposes of regulations issued under section 6045.
191
  General Explanations of the Administration’s Fiscal Year 2024 Revenue Proposals

Secretary, brokers reporting a customer’s adjusted basis on a disposition of a digital asset or other asset subject to the wash sale rules would report the basis of the asset without regard to the wash sale rules unless the sale of the loss asset and the transaction causing the wash sale rules to apply occur in the same account with respect to identical assets.
No inference is intended as to whether the losses claimed by taxpayers from wash sales of digital assets may be deducted under current law, or as to the proper treatment of transactions involving related parties under the wash sale rules under current law.
The proposal would be effective for taxable years beginning after December 31, 2023.

well i'd say the usa is already hamstrung by the IRS backwards legislation about wanting to have a record of every single transaction you do even if it's just a cup of coffee you have to keep records on it and report it. so this won't really change anything who wants to use crypto in the usa? 

President Joe Biden's administration has imposed a 30% tax on bitcoin mining electricity use. Bitcoin mining was not very profitable even though this tax was not levied in the past. But what impact will the new electricity cost have on Bitcoin mining?

Will this additional electricity tax attract new miners to Bitcoin mining?

What will be the impact on hashpower for a 30% mining tax?

Even before the imposition of this tax, some mining companies were in losses.
What are the old mining companies thinking about this tax?

My guess is if this happens we have to cut back to 60kwatts of free power and no cheap power with that 30% tax.

No worries as that bill will bomb.

Simply put: wouldn't mining just move to non US domicile facilities? That is the most straightforward. And have a mix of JV entities in the end

I know a man in the U.S that use solar power to mine Bitcoin, I lost contact with him in 2022,  he told me how he makes money by selling power back to the Grid, I would have love to hear what he plans to do with this 30% tax on Bitcoin mining, because it is not possible to keep mining 24 hours per day using solar energy without the grid power.

In my point of view that Bitcoin and also crypto might be in great danger because having 30% taxes on the Bitcoin could cause significant ending of mining powerhouse that run full on crypto and it could be a disaster for the Cryptocurrency community too.

I know a man in the U.S that use solar power to mine Bitcoin, I lost contact with him in 2022,  he told me how he makes money by selling power back to the Grid, I would have love to hear what he plans to do with this 30% tax on Bitcoin mining, because it is not possible to keep mining 24 hours per day using solar energy without the grid power.

On the contrary, it will make BTC stronger and set the US back in crypto/Blockchain adoption.

President Joe Biden's administration has imposed a 30% tax on bitcoin mining electricity use. Bitcoin mining was not very profitable even though this tax was not levied in the past. But what impact will the new electricity cost have on Bitcoin mining?

Will this additional electricity tax attract new miners to Bitcoin mining?

What will be the impact on hashpower for a 30% mining tax?

Even before the imposition of this tax, some mining companies were in losses.
What are the old mining companies thinking about this tax?

Well Trump taxed  China imports at 30% I have paid thousand in import duties . It slowed my mines growth.

I would need to read the tax bill proposed to under stand if it will hurt my mine as much or more than the import tax.

President Joe Biden's administration has imposed a 30% tax on bitcoin mining electricity use. Bitcoin mining was not very profitable even though this tax was not levied in the past. But what impact will the new electricity cost have on Bitcoin mining?

Will this additional electricity tax attract new miners to Bitcoin mining?

What will be the impact on hashpower for a 30% mining tax?

Even before the imposition of this tax, some mining companies were in losses.
What are the old mining companies thinking about this tax?

President Joe Biden's administration has imposed a 30% tax on bitcoin mining electricity use. Bitcoin mining was not very profitable even though this tax was not levied in the past. But what impact will the new electricity cost have on Bitcoin mining?

Will this additional electricity tax attract new miners to Bitcoin mining?

What will be the impact on hashpower for a 30% mining tax?

Even before the imposition of this tax, some mining companies were in losses.
What are the old mining companies thinking about this tax?

President Joe Biden's administration has imposed a 30% tax on bitcoin mining electricity use. Bitcoin mining was not very profitable even though this tax was not levied in the past. But what impact will the new electricity cost have on Bitcoin mining?

Will this additional electricity tax attract new miners to Bitcoin mining?

What will be the impact on hashpower for a 30% mining tax?

What are the old mining companies thinking about this tax?