President Biden is proposing a 30 percent excise tax on electricity used to mine for cryptocurrency as part of his Fiscal Year 2024 budget submission to Congress released on March 9.
“An excise tax on electricity usage by digital asset miners could reduce mining activity along with its associated environmental impacts and other harms,” the Treasury Department wrote in an explanation of the President’s revenue proposals.
Under the Digital Asset Mining Energy Excise Tax 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.
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. The Treasury Department estimates it would raise approximately $3.5 billion over the next decade.
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.
The President is also proposing expanding the Low Income Home Energy Assistance Program to allow for the provision of water assistance. To help pay for the expanded scope of the program, the budget would increase regular annual funding by $111 million to $4.1 billion. The budget does not propose repeating emergency appropriations for the program.