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Biden’s Absurd 30% Tax Proposal Would Kill US Bitcoin Mining
The Biden administration recently reintroduced a proposal that would place a 30% tax on all “cryptocurrency miners” – a movement that represents an ideological witch hunt against a rapidly growing industry (see my previous comments).
The change, part of the government budget proposal for the next fiscal year introduced in March, stands in stark contrast to recent pro-crypto statements from former President Donald Trump, who this week called for the US to dominate the bitcoin mining sector. It remains to be seen whether the special tax on cryptocurrency mining will take effect (or whether Trump will enforce his aggressive crypto policies if elected), although in recent weeks many have begun to argue that President Biden may be going soft on the industry.
See too: Trump’s appeal to Bitcoin miners is a warning for crypto to remain apolitical | Opinion
It must be stated that the implementation of a 30% federal blanket tax on digital asset mining will kill the sector and wipe billions of dollars off investor value in the United States, and very likely in Canada as well, given the way the current Canadian federal administration closely follows US precedents in regulatory matters.
Taras Kulyk is founder and CEO of Sunny Side Digital.
Note: The opinions expressed in this column are those of the author and do not necessarily reflect those of CoinDesk, Inc. or its owners and affiliates.
In the “land of the free,” this type of heavy-handed, Stalinist central planning directive screams in the face of the democratic ideals (ironically) that should be upheld by the current White House administration. First, they came for your digital mining and you did nothing…
The fine print of Biden’s proposed tax
The egregious mining tax, implemented despite billions of dollars invested in the sector, is part of its fiscal year 2025 budget proposal, which aims to address environmental concerns and regulate the digital asset mining industry. The proposal suggests that the tax would be introduced gradually over three years, starting at 10% in the first year, increasing to 20% in the second year and reaching 30% in the third year. This tax exclusively harms digital mining, and not data centers in general.
The administration argues that the tax is necessary to combat the environmental impacts of cryptocurrency mining, including its high energy consumption and the potential for increased energy prices for communities hosting mining operations, in light of well-established research that This line of concern is the exact opposite of economic reality and the operational impact for energy companies.
The story continues
Although I am not a lawyer and these arguments should be taken with caution, it is important to note that it is likely unconstitutional for a presidential administration to tax the energy use of a specific industry. There is simply no precedent for this.
By targeting a specific industry with an energy consumption tax, the government could be seen as violating a number of clauses, including The commercial clause in Article I, Section 8, Clause 3 of the U.S. Constitution, the Equal Protection Clause found in the 14th amendment, the Due Process clause found in the Fifth Amendment of the U.S. Constitution or under the unintended consequences status.
Furthermore, there are ethical implications at play that go beyond any potential unconstitutional excess. This type of deception has become all too common and is something the US founders were aware of and tried to prevent through the Constitution itself.
How to kill an emerging industry 101
The tax proposed by the Biden administration would impose a significant financial burden on digital mining companies, most likely making their operations economically unviable. Given that these companies already face intense competition and tight margins, this tax would only worsen financial difficulties and lead to material losses for investors.
As a result, many mining companies would likely be forced to close or relocate to other countries with more favorable tax policies, leading to job losses and reduced economic activity in the United States.
Furthermore, the proposed tax would disproportionately affect smaller digital mining operations, which may not have the resources to absorb the additional costs or to relocate to other jurisdictions. This would create an uneven playing field, favoring larger, more established mining companies and stifling competition and innovation in the sector, as well as increasing centralization for larger operators.
If this administration’s goal is to harm small businesses, stifle innovation and develop a reputation for reducing economic activity in the US, then they are on the right track.
Environmental concerns and the ineffectiveness of the tax
The Biden administration claims the proposed tax is necessary to address the environmental impact of bitcoin mining, as it consumes significant amounts of electricity. However, this argument ignores the fact that many mining operations already use renewable energy sources and are actively working to reduce their carbon footprint.
Furthermore, the proposal does not take into account the use of methods such as methane burning, which reduces CO2 equivalent emissions by around 63% when compared to traditional methods of burning methane and mining in landfills, which in one year have the same effect of plant five million trees and let them grow for 10 years. It has been proven that Bitcoin mining strengthen networks and even reduce energy costs for local communities.
In fact, imposing a tax on energy consumption could discourage these efforts and encourage miners to use less environmentally friendly energy sources abroad. What will happen is a mass exodus of miners out of the US, which has the largest renewable energy composition, and transfer them abroad, where fossil fuels are more predominantly used.
The fact is that, about 90% of carbon emissions come from outside the United States. Since addressing “environmental concerns” is a global problem, they would only be contributing to the problem through their own logic.
So what should the government do? Anything. Let the free market reign. Bitcoin miners are the energy beetles. They go where energy is cheapest, and given the initial operating expenses of fossil fuel miners and the low operating expenses of renewables, it’s easy to see why most mining comes from renewable sources.
Global competition
The bitcoin mining industry is highly competitive, with countries like China, Russia and Canada vying for dominance. The proposed tax would harm the United States’ position in this global race, as it would make the country a less attractive destination for mining operations. This could result in a significant loss of investment, talent and technological advances, ultimately weakening the United States’ role in the digital economy.
A lesson learned later China banned bitcoin mining in 2021 it was the resilience and adaptability of the bitcoin mining industry. Despite the ban, bitcoin mining operations have found new homes in countries with more favorable regulatory environments and access to renewable energy sources. This demonstrated that the Bitcoin network is not geographically confined and can adjust to regulatory changes.
Furthermore, the shift to more sustainable energy sources has highlighted the potential for bitcoin mining to positively contribute to the global energy transition.
Furthermore, the tax could also have broader implications for the cryptocurrency industry as a whole. By targeting bitcoin mining, the Biden administration may inadvertently discourage innovation and investment in the industry, which could have far-reaching consequences for the country’s technological development and competitiveness.
You can’t ban mining, you can only ban yourself
In short, the Biden administration’s proposed tax on bitcoin mining would have serious negative consequences for the industry and the broader digital economy in the United States, and therefore for its own initiatives.
See too: Bitcoin Miners Show Resistance Against Unwarranted EIA Survey
It would impose a significant financial burden on mining companies, discourage sustainable mining practices and harm the country’s competitiveness in the global market. This type of measure is more in line with oppressive countries like China or the USSR, and it is incredibly disheartening to see this in the United States.
Just as the industry came together to defeat the unconstitutional EIA research, we must place the same attention here. You cannot ban Bitcoin mining, you can only ban yourself.
The spotlight next week will shift somewhat to the Federal Reserve’s second-quarter earnings season and monetary policy. Market watchers will be treated to results from several major names, including Dow 30 components Goldman Sachs (GS), UnitedHealth (UNH), Johnson & Johnson (JNJ) and American Express (AXP), along with streaming giant Netflix (NFLX).
The Fed will still attract some attention as investors will be eager to hear from a packed lineup of central bank speakers just before the policy meeting lockout period.
In terms of the economic calendar, after fifteen days of labor market and inflation indicators, activity data will gain momentum in the form of the latest retail sales and industrial production reports.
Earnings Highlight: Monday, July 15 – Goldman Sachs (GS) and BlackRock (Black). See the full earnings calendar.
Earnings Highlight: Tuesday, July 16 – UnitedHealth (UNH), Bank of America (BAC), Progressive (PGR), Morgan Stanley (IN), PNC Financial (PNC) and JB Hunt Transport (JBHT). See the full earnings calendar.
Earnings Highlight: Wednesday, July 17 – Johnson & Johnson (JNJ), US Bancorp (USB), Morgan Children (KMI), United Airlines (UAL) and Ally Financial (ALLY). See the full earnings calendar.
Earnings Highlight: Thursday, July 18 – Netflix (NFLX), Abbott Laboratories (ABT), Black stone (BX), Domino’s pizza (ZDP) and Taiwan Semiconductor Manufacturing (TSM). See the full earnings calendar.
Earnings Highlight: Friday, July 19 – American Express (AXP), Halliburton (THANKS) and Travelers (VRT (return to recoverable value)) See the full earnings calendar.
IPO Observation: Hospital and healthcare clinic operator Ardent Health Partners (TARDT), insurance service provider Twfg (TWFG) and the biotechnology company Lirum Therapeutics (LRTX) are expected to price their IPOs and begin trading next week. The analyst quiet period ends at Rectitude (RECT) to free up analysts to publish ratings.
Police cars outside the residence of Thomas Matthew Crooks, the suspected shooter at a Trump rally on Saturday, investigate the area in Pennsylvania. Following the incident, one rally attendee was killed, two rally attendees are in critical condition and Donald Trump suffered a non-fatal gunshot wound. The shooter is dead after being shot dead by the United States Secret Service. (Photo by Kyle Mazza/Anadolu via Getty Images)
Investors will initially favor traditional safe-haven assets and may lean toward trades more closely tied to former President Donald Trump’s chances of winning the White House after he survived an assassination attempt, according to market watchers.
“There will undoubtedly be some protectionist or safe-haven flows into Asia early this morning,” said Nick Twidale, chief market analyst at ATFX Global Markets. “I suspect gold could test all-time highs, we’ll see the yen being bought and the dollar, and flows into Treasuries as well.”
Early market commentary suggested Trump’s shooting at a rally in Pennsylvania on Saturday could also prompt traders to increase his likelihood of success in the November election. His support for looser fiscal policy and higher tariffs is generally seen as likely to benefit the dollar and weaken Treasuries.
An indicator of market sentiment heading into the weekend: Bitcoin surged above $60,000, likely reflecting Trump’s pro-crypto stance.
Other assets positively linked to the so-called Trump trade include stocks of energy companies, private prisons, credit card companies and health insurers.
Traders will also be closely watching market measures of expected volatility on Monday, such as those in the tariff-sensitive Chinese yuan and Mexican peso, which have begun to price in the U.S. vote.
Trump said he was shot in the right ear after a shooting at his rally. His campaign said in a statement that he was “fine” after the incident, which prompted him to rush off the stage.
“Currencies will be the first major market on Monday in Asia to react to the weekend’s shots. There’s potential for extra volatility, and getting a clear reading could be especially difficult because liquidity will be hurt by Japan’s national holiday,” said Garfield Reynolds, Asia team leader for Bloomberg Markets Live.
Strategists had already expected a volatile run-up to the election, particularly as Democrats are still agonizing over President Joe Biden’s candidacy after his poor performance in last month’s debate raised questions about his age. Investors were also grappling with the possibility that the election could end in a drawn-out dispute or political violence.
But there is little precedent for events like those in Pennsylvania. When President Ronald Reagan was shot four decades ago, the stock market plunged before closing early. The next day, March 31, 1981, the S&P 500 rose more than 1% and benchmark 10-year Treasury yields fell 9 basis points to 13.13%, according to data compiled by Bloomberg.
Bond investors should pay particular attention as the attack is likely to boost Trump’s election chances and ultimately lead to concerns about the fiscal outlook, according to Marko Papic, chief strategist at California-based BCA Research Inc.
“The bond market must at some point become aware of President Trump’s greater chances of winning the White House than any of his rivals,” Papic wrote. “And I continue to believe that as his chances increase, so too must the likelihood of a bond market revolt.”
Kyle Rodda, senior financial markets analyst at Capital.com, said he was seeing client flows into Bitcoin and gold following the shooting.
“This news marks a turning point in American policy norms,” he said. “For markets, it means safe-haven trades, but more tilted toward non-traditional safe-havens.”
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Jio Financial share price: Should you buy this Reliance group stock on Monday ahead of Q1 FY2024 results?
Q1 2024 Results: Jio Financial Share Price will be in focus on Monday as the Reliance Group company has a fixed board meeting on July 15, 2024 to consider and approve the company’s unaudited standalone and consolidated financial results. Trust Group company informed about the Q1 2024 Results date on Wednesday last week via an exchange filing. According to stock market experts, Jio Financial Services Limited is poised to deliver impressive Q1 results for FY25 on solid operating income. They have forecast a healthy QoQ PAT for the company in Q1 FY25.
Jio Financial Services News
Speaking on the Jio Financial Services Q1 2024 results, Manish Chowdhury, Head of Research, StoxBox, said, “We believe Jio Financial Services is poised to deliver impressive results in Q1FY25 aided by its operating income, which is likely to show robust growth driven by strong investment income, which in turn should lead to healthy PAT growth on a sequential basis. Jio Financial Services continues to make strategic moves such as launching digital products and expanding its ecosystem, with a clear focus on future growth. The company has announced plans to introduce products for lending against stocks and mutual funds, leveraging Jio’s large user base, which could be a significant growth driver in the coming quarters.”
“Furthermore, with the NBFC receiving RBI approval to become a primary investment company, Jio Financial Services is well-positioned to unlock value from its investments. Overall, we expect the company to report robust numbers in the upcoming quarter,” the StoxBox expert added.
Jio Financial Stock Target Price
Speaking about the technical outlook of Jio Financial share price, Ganesh Dongre, Senior Manager, Technical Research at Anand Rathi, said, “Jio Financial Services share price is poised to make a fresh high at the ₹260 apiece level. If the stock breaks above this mark, the Reliance Group stock could make a fresh high by touching the ₹290-₹295 zone. Hence, those with Jio Finance stock in their portfolio are advised to stick to the script by keeping a stop loss at ₹205. If the stock breaks above ₹260 decisively, then one can upgrade the stop loss at ₹240 for the near-term target of ₹295.”
On the advice to new buyers regarding Jio Financial stock, Ganesh Dongre said, “New buyers are advised to wait for the breakout. Once the stock breaks above ₹260, one can buy this Reliance Group stock at the short term target of ₹295, keeping a stop loss of ₹240 apiece.”
Disclaimer: The views and recommendations made above are those of individual analysts or brokerage firms, and not of Mint. Investors are advised to consult with certified experts before making any investment decisions.
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