SNEAK PEEK
- Biden proposes a $6.9T budget, including taxes on bitcoin mining electricity.
- ConsumptionTax aims to reduce carbon emissions and incentivize renewable energy use.
- White House considers ending tax-loss harvesting, aligning crypto tax rules with stocks.
According to recent sources, Joe Biden, the incumbent President of the United States, has disclosed a $6.9 trillion budget estimate for 2024. In addition, the Treasury Department has suggested implementing a 30% consumption tax on the electricity expenses of bitcoin mining activities.
Further, in a budget proposal document, the Department of Treasury elaborated that the proposed consumption tax on the electricity supply costs of bitcoin mining companies is set to be implemented gradually over a three-year period, starting after December 31.
The document went on to claim that the tax rate would begin at 10% in the first year and increase by 10% each subsequent year until reaching the maximum tax rate of 30% by the end of the third year.
In its reasoning for the tax, the Treasury Department stated that cryptocurrency mining operations consume a significant amount of energy, leading to adverse environmental effects. Moreover, the high energy demand of these operations can cause increased costs for those sharing the same power grid and create potential risks and uncertainties for local utilities and communities.
Consequently, the proposed consumption tax on the electricity supply costs of bitcoin miners aims to address these issues and encourage the use of renewable energy sources.
Additionally, on March 9, the White House released a statement confirming that it is considering ending a tax strategy for cryptocurrency transactions that it believes could generate $24 billion in revenue. Currently, cryptocurrency investors are allowed to sell their digital assets at a loss for tax purposes and immediately repurchase those cryptocurrencies, a practice known as tax-loss harvesting.
The proposed rules would align the tax rules for crypto trading with those for stocks, whereas the wash sale rules prohibit such practices. This move aims to ensure fair and transparent taxation in the cryptocurrency market and prevent tax evasion strategies like wash trading.
