Bitcoin mining is linked to rising electricity prices
Thomas Wren/Alamy Stock Photo
The US government has proposed taxing crypto miners to reduce the industry's heavy environmental impact, but experts say the measure could simply shift the problem elsewhere. It warns that there is.
Cryptocurrencies such as Bitcoin are kept secure through a process called mining, which involves intensive calculations and large amounts of power consumption. According to the latest data from the University of Cambridge, Bitcoin accounts for 0.69% of the electricity used worldwide.
In the United States, the government estimates that just 137 mining operations will account for up to 2.3 percent of national electricity use in 2023, but a 5 percent increase in electricity prices in Texas is due to demand from miners. is directly related to the increase in President Joe Biden's fiscal year 2025 budget proposal states that crypto mining “has a negative impact on the environment, raising energy prices for companies that share power grids with digital asset miners, as well as environmental justice impacts.” There is a possibility that it will.''
The budget therefore proposes a 30% tax on miners' total energy costs, which would apply to both electricity from the grid and electricity generated by miners themselves. It will be phased in, with 10 percent starting in 2025, 20 percent in 2026, and finally 30 percent in 2027. A similar tax was proposed by Biden last year but failed to pass the House. Passed by the House and Senate and become law – the hurdle this second attempt of his now faces.
The move, which comes as Bitcoin has soared to an all-time high of more than £56,000 in recent weeks, has drawn heavy criticism from the crypto industry.Dennis Porter of Satoshi Action Fund tweeted It claimed this was a “backdoor ban” on mining and pledged: “We will not hesitate to vigorously oppose any attempt at targeted discrimination.”
new scientist We approached several major Bitcoin mining companies. Block Mining, Frontier Mining and HIVE Digital Technologies did not respond to requests for comment on the tax proposal. The other person, TeraWulf, declined to comment.
But taxing the industry could have unintended consequences, says Alex de Vries of VU University of Amsterdam in the Netherlands. When China banned Bitcoin mining in 2021, companies were forced to move operations to countries such as Kazakhstan, where more than 90% of the country's electricity supply comes from fossil fuels such as coal.
“Perhaps it doesn't actually solve anything, because mining operations are highly mobile and can be based anywhere, moving from country to country in search of better regulatory environments or cheaper power.” They won't,'' says De Vries. “Climate change is a global problem, and moving emissions from one country to another, or worsening power supplies, is actually making the global problem worse.”
“Ideally, we would like to address this issue at a global level,” says de Vries. “You want to reduce the emissions of these miners.” De Vries has long advocated for Bitcoin to follow the lead of the cryptocurrency Ethereum, which has changed the way it operates. changed, abolished mining, and reduced power consumption by 99.99%. But most Bitcoin developers weren't interested in the change, he said.
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