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Bitcoin Price Surge Spurs Crackdown on Crypto Mining

Last Updated February 1, 2024 1:17 PM
Teuta Franjkovic
Last Updated February 1, 2024 1:17 PM

Key Takeaways

  • The U.S. Department of Energy (DOE) has launched an in-depth study into the energy consumption of Bitcoin mining.
  • The Biden administration has declared the power usage associated with Bitcoin mining a national ’emergency’.
  • Industry insiders speculate that the Biden administration’s actions could ultimately lead to a complete prohibition of Bitcoin mining in the U.S.

In a groundbreaking decision, the Biden administration has declared  the power usage associated with Bitcoin mining a national “emergency”.

This pivotal stance aligns with the Department of Energy’s comprehensive endeavor  to collect extensive data from commercial cryptocurrency enterprises across the United States.

DOE Launches In-Depth Energy Study on Cryptomining’s Impact

The Department of Energy (DOE) revealed it is initiating a meticulous investigation  into the energy consumption of Bitcoin mining, a practice increasingly scrutinized for its environmental and sustainability implications. The core of this study  is to establish a comprehensive baseline of the crypto-mining industry’s landscape, meticulously tracking the evolution of mining activities, sourcing the electricity fueling U.S. crypto miners, and pinpointing regions with dense crypto-mining operations.

This intensified focus on Bitcoin mining’s energy footprint underscores the growing concerns over its extensive computational demands and the consequent substantial electricity usage. The initiative aims to address the pressing issues related to the strain on power grids, energy security, and the overall environmental impact of this burgeoning digital economy sector.

The Department of Energy (DOE) seeks to acquire a deeper understanding of the industry’s energy usage trends through its concerted effort to collect data from crypto-mining entities.

This vital information will be instrumental in formulating measures to reduce the environmental impact of crypto mining and bolster the robustness of the United States’ power grid.

Speculations Arise

Amidst the Biden administration’s heightened scrutiny of Bitcoin mining’s electricity consumption , speculations are brewing about potential underlying intentions. Industry insiders are pondering whether labeling the energy use of Bitcoin mining as an emergency serves as a pretext for introducing more stringent regulations or possibly setting the stage for a complete prohibition of the activity.

Such actions could profoundly alter the trajectory of Bitcoin and other digital currencies in the U.S., potentially curbing innovation and constraining the growth of the digital economy. This pivotal moment signifies a decisive crossroads for the cryptocurrency sector within the nation.

As the Department of Energy (DOE) advances its data-gathering initiative, the results could significantly influence the regulatory framework surrounding Bitcoin mining and contribute to the broader discourse on balancing digital currencies, energy consumption, and environmental responsibility.

‘DAME’ Tax on Crypto Mining

Last year Biden has introduced a proposal aimed at addressing the economic and environmental impacts of cryptocurrency mining. The proposal, part of the 2024 federal budget, introduced the Digital Asset Mining Energy (DAME) excise tax , which could levy up to a 30% tax on the electricity expenses of crypto mining companies. The tax structure was designed to unfold in 10% increments over three years, starting from January 2024.

The DAME tax, anticipated to generate approximately $3.5 billion over the next decade, is primarily aimed at combating climate change by addressing the crypto mining sector’s significant energy consumption and environmental footprint.

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