Cryptocurrency mining is wreaking havoc on America’s efforts to take on the climate crisis. President Biden wants to crack down.
The White House announced on Tuesday that the president’s proposed 2024 budget includes the Digital Asset Mining Energy (DAME) tax, which would tax crypto firms at 30 percent of the cost of the electricity they use to mine digital currency in the United States.
“Cryptominers’ high energy consumption has negative spillovers on the environment, quality of life, and electricity grids where these firms locate across the country,” the statement read. “Pollution from electricity generation falls disproportionately on low-income neighborhoods and communities of color. Cryptominers’ intensive and often volatile power consumption also can push up electricity prices for consumers and can increase risks for local electrical grids — straining equipment, causing service interruptions and safety hazards.”
It’s frankly astonishing how much energy it takes to mine crypto, especially considering most Americans probably don’t know much about the practice — if they’re even aware of it at all. Crypto mining is estimated to have consumed somewhere between 36-66 billion kilowatt hours of electricity in 2022, according to the U.S. Office of Science and Technology Policy. The number is on par with how much electricity was used to power all home computers, or all televisions, or, at the higher end of the estimate, all residential lighting in the United States.
Biden isn’t the only politician who wants to take action against crypto mining. Sen. Ed Markey (D-Mass.) and Rep. Jared Huffman (D-Calif.) in March introduced the Crypto-Asset Environmental Transparency Act, which would require crypto companies to disclose all of their emissions. “When one year of U.S. Bitcoin mining creates as many carbon emissions as 7.5 million gas-powered cars — we have a problem,” Markey wrote on Twitter. “The crypto industry is growing, but so is the fight for climate justice. We will hold these companies accountable.”
The following month, The New York Times published an alarming report on the “real-world costs” of crypto mining, explaining how crypto operations put an enormous onus on power grids while creating high electricity and creating pollution for those around them. According to the Times, the 34 largest Bitcoin mines in the U.S. expended as much electricity as three million households.
Crypto isn’t the only industry that consumes a ton of energy, but the White House notes in its statement that unlike manufacturing or other energy-intensive industries, crypto mining has no measurable benefit to the economy: “There is little evidence of benefits to local communities in the form of employment or economic opportunity, and research has found that minor increases in local tax revenue are more than offset by increased energy prices for firms and households.”
The White House says the DAME tax would create an estimated $3.5 billion in revenue over 10 years. “The primary goal of the DAME tax is to start having cryptominers pay their fair share of the costs imposed on local communities and the environment,” the statement concludes.
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