Cynthia Lummis recently released a report criticizing the Biden administration’s proposed 30% excise tax on the energy consumed by Bitcoin miners. She argues that this tax could have severe repercussions on the growing Bitcoin mining industry in the United States. Lummis contends that the concerns about environmental pollution and risks to the energy grid, which the administration claims are behind the proposed tax, are unfounded. She believes that even if the administration’s intentions are genuine, the tax should still be rejected. According to Lummis, the tax is poorly designed and could undermine its stated objectives. She warns that such a tax could force Bitcoin mining operations to relocate overseas to more favorable jurisdictions, similar to the aftermath of China’s ban on Bitcoin mining.
Contrary to the administration’s claims that Bitcoin mining poses risks to local utilities and grid operations, Lummis argues that Bitcoin mining can actually benefit energy grids. Miners have demonstrated the ability to quickly adjust energy usage to balance supply and demand, thereby preventing blackouts. For example, in Texas, Bitcoin miners collaborated with ERCOT to stabilize the grid during peak demand, selling back excess energy during severe weather events. Data from August 2023 shows that Bitcoin miners contribute significantly to grid stability, providing an interruptible load equivalent to 25% of all utility battery storage in the U.S. and Canada. Additionally, a 2023 study suggests that Bitcoin mining could be more effective than current technologies in restoring grid frequency during disasters.
Lummis also highlights the sustainability aspect of Bitcoin mining, noting that mining facilities are fully electric and increasingly powered by cleaner energy sources. The Bitcoin Energy and Emissions Sustainability Tracker estimates that over half of the energy used by Bitcoin miners is emission-free and improving. Furthermore, a KPMG report reveals that Bitcoin mining consumes energy equivalent to household appliances like tumble dryers. Lummis argues that Bitcoin mining has the potential to contribute to upgrading America’s energy infrastructure. By continuing to study the effects of this technology and allowing it to evolve, the industry could play a key role in advancing the country’s energy sector.
Economic Benefits of Bitcoin Mining
In addition to its environmental and grid-stabilizing benefits, Bitcoin mining also provides economic advantages, particularly for underserved areas. Lummis points out that Bitcoin mining operations are lawful American businesses that pay taxes and contribute significantly to community development, especially in rural or economically disadvantaged regions. By expanding the presence of Bitcoin mining in the U.S., there is potential for job creation and economic growth, benefiting a wide range of communities.
The proposed taxes on Bitcoin mining in the U.S. could have far-reaching negative consequences on an industry that has the potential to contribute to both environmental sustainability and economic development. It is crucial for policymakers to carefully consider the implications of such taxes and their impact on the future of Bitcoin mining in the country.
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