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The President of the United States of America, Joe Biden, has proposed a substantial 30% tax on crypto miners based in the States.
If the proposal is passed, crypto mining individuals and firms are looking at some major losses, starting next year. Firms or leased mining facilities would be subjected to a 30% tax on their overall electricity bills used for mining digital assets.
The Department of the Treasury publicized a Fiscal Year 2024 Revenue Proposal last Thursday. The proposal highlights the harmful environmental impacts of crypto mining activities. It also outlines the risks that “local utilities and communities” face due to the high variability and high mobility of crypto mining.
Furthermore, there is another amendment to implement wash sales rules for digital assets. Following the footsteps of countries, like Canada and Australia, the United States will implement this set of rules to prevent the abuse of crypto mining by shutting down the tax-loss harvesting method.
Crypto traders and investors will, however, be liable to heavy losses. They will be promoted to buy and sell digital assets as quickly as possible to reduce the offset taxes on any profits subject to taxation.
The Head of Tax at Koinly, Danny Talwar, shared his thoughts on the matter:
“If the rule is applied, the timing is significant as many crypto holders who entered the crypto space on the back of 2021 market peaks are suffering from heavy losses.”
Environmental Effects Of Cryptocurrencies
Cryptocurrencies, such as Bitcoin, require a significant amount of energy to power their networks and mining operations, contributing to greenhouse gas emissions and climate change. Additionally, the manufacturing and disposal of cryptocurrency mining hardware can generate electronic waste.
Cryptocurrencies can also be used to facilitate illegal activities, such as money laundering and illicit transactions, which can have negative social and environmental impacts. Finally, the increasing demand for energy to power cryptocurrency mining operations can lead to competition for limited resources and strain local power grids.
Due to the environmental effects of cryptocurrencies and other digital assets, a lot of people cannot focus on their positive sides. Hence, the negative effects, especially environmental effects, of digital assets must be solved.
