Senator Cynthia Lummis Deems Biden’s Bitcoin Mining Tax Unreasonable

Senator Cynthia Lummis has strongly opposed the Biden administration’s proposal to impose a 30% tax on electricity used by Bitcoin miners. 

Lummis argues that this move could significantly harm the burgeoning Bitcoin mining industry in the United States, which has seen substantial growth since China banned Bitcoin mining in 2021.

Impact on the Bitcoin mining industry

The Bitcoin mining industry in the U.S. has flourished due to the country’s stable energy market and strong legal framework. Following China’s decision to prohibit Bitcoin mining, the United States quickly became a leading hub for the industry, attracting significant investments and top talent. However, the proposed 30% excise tax on Bitcoin miners’ electricity threatens to undermine this progress.

Lummis believes this tax could drive the industry out of the U.S. and into other countries. She contends that the Treasury’s rationale for the tax is based on outdated perceptions of energy use and technology. In her report, Lummis seeks to dispel the myths surrounding the tax proposal, emphasizing the economic and energy benefits of Bitcoin mining, such as job creation, support for energy infrastructure, and technological innovation.

Economic and energy benefits

Lummis highlights that Bitcoin mining has evolved from a small-scale activity using home computers to large-scale operations. The U.S., with its affordable and reliable energy, strong property rights, and respect for the rule of law, has become an ideal location for these operations. According to Lummis, Bitcoin miners are legitimate American businesses that pay standard taxes and contribute significantly to the economy, especially in underserved areas.

Despite the administration’s goals, Lummis argues that the proposed tax could have unintended consequences. She describes the policy as poorly designed and potentially harmful to the objectives it aims to achieve. The administration claims that Bitcoin mining poses risks to local utilities’ grid operations, but Lummis points out that no evidence supports this claim. Instead, studies suggest that Bitcoin mining can strengthen energy grids.

Grid stability and disaster response

Bitcoin miners can act as flexible loads that help balance energy grids by adjusting their energy use based on supply and demand. This flexibility reduces the risk of blackouts and disruptions. The Bitcoin Mining Council reported in August 2023 that the available interruptible load from Bitcoin miners is approximately 25% of all installed utility battery storage in the U.S. and Canada, and this number is growing.

Furthermore, research indicates that Bitcoin mining can restore balance to a grid after a disaster. Studies from 2023 suggest that Bitcoin mining is significantly more effective than existing technologies for returning a grid to the proper frequency during a crisis.

Lummis concludes her report by warning that the U.S. risks losing its competitive edge in Bitcoin mining if it fails to create a supportive and stable environment for the industry. She emphasizes the need to capitalize on the country’s current advantages and avoid falling behind in a race that the U.S. has every opportunity to lead.

Senator Cynthia Lummis strongly opposes the Biden administration’s proposed tax on Bitcoin mining electricity. She believes it could harm the U.S. Bitcoin mining industry, which has thrived due to the country’s stable energy market and strong legal framework. Lummis calls for a supportive environment to maintain the U.S.’s leadership in this growing sector.

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