In early May, information appeared about the plans of the administration of US President Joe Biden to introduce a 30 percent tax on cryptocurrency miners.
Alas, the implementation of such an initiative can only harm the economy: it will not only push crypto firms away from doing business in the United States but will also not be able to replenish the budget with the planned amount of funds.
This was during an interview at the Bitcoin 2023 conference, said the CEO of the mining company Marathon Digital Fred Thiel. Let’s talk about the expert’s point of view in more detail.
Recall that the idea of a 30 percent tax for miners became known in early May 2023. The voiced reason for such a tough decision was the negative impact of the owners of ASIC miners on the environment.
Despite such a news background, the popularity of Bitcoin mining is increasing. In particular, on Thursday, another recalculation of the BTC mining difficulty took place, as a result of which the indicator increased by 3.22 percent to a record level of 49.55 T.
It is also important to note that the average hash rate on the Bitcoin network over the past two weeks has been 354 exahash per second. And this is also the maximum of the corresponding indicator.
What is the tax on mining?
Thiel hinted that due to the plans of the presidential administration, a massive outflow of miners from the country could begin. At the same time, the main goal of the tax plan will not be fulfilled, the expert believes. Here is his corresponding remark on this subject, which is given by The Block.
In fact, this will lead to a decrease in the amount of “green electricity” produced. Today, the construction of a solar or wind power plant takes a very long time, because the queue for connection is two years. And Bitcoin miners provide an economic incentive for people in the energy industry.
That is, the expert believes that such a tax rate will not only not protect the environment, but will also worsen the situation with it. Yet in the United States, renewable energy sources among miners are in demand. Well, the possible relocation of the owners of ASIC miners to other countries and regions can change what is happening for the worse.
Recall that the bill under the abbreviation DAME is designed to stimulate the use of renewable energy sources by miners. Well, since this takes a lot of time, the number of people who want to wait may not be so large.
In fact, “concern for the environment” is just an excuse to put pressure on the digital asset industry, according to a Marathon spokesperson. Bitcoin miners are accused of wasting too much and “unreasonable” electricity, although there are many other enterprises in the same USA that consume much more resources with less economic benefits. The representative of Marathon himself notes that his employees are already looking for opportunities to expand in other regions of the world.
In addition to the tax plan, major mining companies in America have rivals in the banking industry, Thiel argues. Here is his quote on the matter.
The banking lobby is really present in the game. They do not want the development of the crypto industry, which undermines the banking industry. Bitcoin mining in Texas eliminates the need for power plants, so it negatively impacts their business.
Marathon recently received a subpoena from the Securities and Exchange Commission (SEC). However, Thiel assured that the notification is not a sign of any threat: for now, the regulator is simply asking for additional information about the mining company. He’s interested in possible violations of federal securities law on the company’s farm in Hardin. That is, such a notice is alarming in any case.
If regulators and politicians cannot be resisted, they must be lobbied, a practice already resorted to by the companies behind the most popular stablecoins. According to Decrypt, relatively large amounts of funds have already been spent on lobbying the interests of crypto companies among legislators since the beginning of this year.
Here, Tether and Circle are leading, and are issuing USDT and USDC tokens, respectively. In total, they spent more than a million dollars to protect their own interests. In particular, every quarter Tether pays a minimum of $120,000 to the consulting firm FTI, and this money is only used to lobby interests in the field of stablecoin regulation. In total, since the beginning of 2022, Tether has spent at least $600,000 on such transactions.
This information was commented by the speaker of the company. Here is his quote.
As a responsible industry player, Tether considers it essential to contribute to the development of a transparent and balanced regulatory framework that promotes innovation while ensuring consumer protection along with market integrity.
The circle is actively partnering with experts from Invariant to advise policymakers on business matters, and services that cost the stablecoin issuer $100,000 per quarter. In total, since the end of 2021, Circle has spent about $560,000 in this area.
Given what is happening, it can be assumed that lobbying interests among US politicians can become an important part of the development of local crypto firms. It may even be possible in this way to “push through” regulations that would contribute to the long-term growth of the industry.
We believe that the actions of the US authorities and regulators in 2023 really look like repression against the cryptocurrency industry. So far, local commissions are in no hurry to create adequate rules for the operation of the niche of digital assets, but only issue fines to popular companies.
I would like to believe that this attitude will change, but officials will be able to discern the right approach for interacting with a promising industry.