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Biden’s tax plan sparks crypto industry backlash

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President Joe Biden’s suggestion of a 30% tax on crypto mining electricity usage has been criticized for its potential negative impact on the industry and the reduction of investor wealth.

The recent surge in the value of Bitcoin and other cryptocurrencies has put Bitcoin (BTC) back in the spotlight, leading to an unexpected change in attitude towards cryptocurrencies from former President Donald Trump.

Bitcoin’s value recently surpassed $71,000, exceeding its previous all-time high in 2021 before dropping below $70,000. This increase not only highlighted Bitcoin but also drove up the prices of other cryptocurrencies such as Ethereum (ETH), XRP, and Solana (SOL). BlackRock, the leading asset management firm globally, forecasts a crypto market expansion reaching $90 trillion.

On the other hand, President Joe Biden is facing criticism for policies that are seen as detrimental to the crypto industry, potentially resulting in the loss of billions in investor wealth. The Biden administration has proposed a 30% tax on crypto mining operations, which heavily rely on energy-intensive computing for validating transactions and ensuring network security. As per the “General explanation of the administration’s fiscal year 2025 revenue proposals” dated March 11, 2024:

Any company utilizing computing resources, whether self-owned or leased, for mining digital assets would be liable for a 30% excise tax on the electricity costs used in digital asset mining.

This proposition from the U.S. Treasury’s 2025 revenue plan could significantly impact the mining industry, leading to substantial losses in investor value, according to Taras Kulyk from SunnySide Digital:

“Imposing a uniform 30% federal tax on digital mining would likely eradicate the sector and swiftly wipe out billions of dollars of investor value within the U.S.”

Senator Cynthia Lummis, a supporter of cryptocurrencies, cautioned that such a tax could erase the industry’s presence in the U.S. However, some view the White House’s budget as a display of confidence in the revenue-generating potential of crypto assets, indicating an optimistic outlook on Bitcoin and digital assets.

Featured image: ideogram

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