Riding The Wave News Summary 151
Proposed 30% Crypto Mining Tax Dropped in US Debt Ceiling Deal, Washington Ignored Crypto for Now. That’s Good for Bitcoin., & more.
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Proposed 30% Crypto Mining Tax Dropped in US Debt Ceiling Deal
In a favorable turn of events for cryptocurrency miners in the US, the proposed tax on their electricity usage has been dropped according to Republican congressman Warren Davidson.
After lengthy negotiations, an agreement was reached between President Joe Biden and House Speaker Kevin McCarthy to raise the country’s debt ceiling until January 2025, extending past the next presidential election.
The debt ceiling represents the maximum amount of debt the government is allowed to issue. By increasing the debt ceiling, the government can borrow more money to meet its financial obligations and prevent a potential default.
Rep. Davidson (R-Ohio) confirmed the development about the proposed crypto tax via Twitter on Monday.
“Yes, one of the victories is blocking proposed taxes,” he said in response to crypto miner Riot Platform’s VP of Research Pierre Rochard, who noted the absence of bitcoin mining in the new bill outlining the terms to raise the debt ceiling.
In early May, the White House suggested a tax on electricity used by cryptocurrency miners called the Digital Assets Mining Energy (DAME) excise act. The proposal aimed to impose a 10% tax on miners’ electricity usage from 2024, gradually escalating to 30% by 2026.
It’s important to note that neither the White House nor the US Treasury has confirmed that the mining tax has been scrapped. Blockworks has reached out for comment.
Washington Ignored Crypto for Now. That’s Good for Bitcoin.
The words “crypto” and “cryptocurrencies” don’t appear at all in the initial version of the deal. I wrestle with whether that’s good or bad. The Digital Asset Mining Energy (DAME) excise tax wasn’t included, so I’ve landed on the former since the omission is positive for the industry.
The proposal would’ve levied a 30% tax on any firm using computing resources to mine digital assets. The premise was driven by concerns about the consumption of fossil fuels in mining, and subsequent environmental harm.
At first glance, this provision may actually be a positive for bitcoin (BTC) miners. Since some of them use excess natural gas as an energy source, several have previously set up operations near the Marcellus and Utica Shales to accomplish this.
Increased infrastructure for natural gas may lead to increased production, and thus increased excess gas, resulting in increased sources of energy for miners in the region. I would label this as an indirect benefit, and definitely one that was unintentional.
Total public debt will undoubtedly rise, as will the amount of interest payments being made by the U.S.
The spread between 2- and 10-year Treasury yields remains negative, as short-term debt rates remain higher than longer-term debt. The problematic nature of the inverted yield curve can’t be ignored. It's the equivalent of telling someone that you have more faith that someone will be able to pay you back in 10 years than in two – not exactly a ringing endorsement of present economic strength.
Sell Crypto Volatility in May, and Go Away?
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