Cynthia Lummis recently raised concerns about the Biden administration’s proposal to impose a 30% excise tax on the energy consumed by Bitcoin miners. She argues that this tax could have severe consequences for the growing Bitcoin mining industry in the U.S. Lummis believes that the administration’s concerns about environmental pollution and risks to the energy grid are unfounded and that the proposed tax should be rejected.
According to Lummis, the poorly designed policy of the proposed tax could undermine its stated objectives and drive Bitcoin mining operations overseas to more favorable jurisdictions. She pointed to the aftermath of China’s ban on Bitcoin mining, where 90% of the industry either closed or moved. With energy being the primary cost in Bitcoin mining, even small tax increases could be devastating for the industry in the U.S. Lummis warned that imposing a blanket tax on Bitcoin mining could lead to a loss of economic benefits and job opportunities for American communities.
Contrary to the administration’s claims that Bitcoin mining poses risks to local utilities and grid operations, Lummis argues that it can actually strengthen energy grids. She highlighted examples of Bitcoin miners in Texas working with ERCOT to stabilize the grid during peak demand, selling back excess energy during Winter Storms Elliot and Heather. Data from August 2023 shows that Bitcoin miners provide a significant interruptible load equivalent to 25% of all utility battery storage in the U.S. and Canada. A study conducted in 2023 also found that Bitcoin mining could be ten times more effective than current technology in restoring grid frequency during disasters.
Lummis also pointed out that Bitcoin mining facilities, like electric vehicles, are fully electric and are increasingly using cleaner energy sources. The Bitcoin Energy and Emissions Sustainability Tracker estimates that up to 52.6% of the energy used by Bitcoin miners is emission-free and improving. Additionally, a report by KPMG found that Bitcoin mining uses energy equivalent to household appliances like tumble dryers. Lummis emphasized that Bitcoin mining is already showing promise as an important tool for upgrading America’s energy infrastructure and that aggressive taxes could hinder progress in this area.
Furthermore, Lummis highlighted the economic benefits of Bitcoin mining for underserved areas in the U.S. She noted that Bitcoin miners are lawful American businesses that pay taxes and significantly contribute to community development, especially in rural or economically depressed regions. By threatening the industry with aggressive taxes, Lummis believes that America’s infrastructure could be left stagnant and unable to benefit from the technological advancements that Bitcoin mining can offer.
The proposed tax on the energy consumed by Bitcoin miners could have far-reaching negative consequences for the industry in the U.S. and hinder its potential to contribute positively to energy grids, cleaner energy sources, and economic development in underserved areas. It is essential to carefully consider the implications of such a tax before implementing it to ensure that America’s energy infrastructure can continue to evolve and benefit from innovative technologies like Bitcoin mining.
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