US Debt Default Bill Does Away With Crypto Mining Tax

A tentative agreement to prevent the US government from debt default will probably nix the proposed 30% tax on crypto mining energy use, Cointelegraph reported, citing Ohio Rep. Warren Davidson.

US legislators recently released a draft of a proposed law after negotiating with President Joe Biden and House Speaker Kevin McCarthy. If accepted, the law will let the government increase the debt ceiling - a limit on how much debt the US Treasury can generate.

Avoiding an economic disaster

The bill must pass in Congress before it can come into force. Its goal is to prevent a likely economic disaster for the US government.

The bill proposes to suspend the ceiling for two years, which would let the government keep borrowing money to cover previous debt. Reportedly, the president had requested tax increases for high-income persons and corporations, but that’s not likely to happen according to the most recent draft.

Davidson informed that the bill eliminated a number of potential taxes, including a hefty 30% on the electricity used to mine crypto. The president had proposed this as part of his budget for fiscal year 2024.

If the tax is approved, crypto miners may face a 10% tax increase for electricity generated in 2024, 2025, and 2026.

Biden: No one "got what they wanted"

After the talks, the president admitted the agreement was a compromise and “no one got everything they wanted.” It did fulfill its purpose to prevent a default, which would have been the first in US history.

Sharp criticism of tax

Many entities in the crypto space had criticized the US government and supporters of the mining tax way before debt default emerged as a possible issue. One of them is ex-Kraken executive Dan Held, who expressed support for the debt ceiling bill.

The deadline for debt default is in June. The House of Representatives will convene to vote on the bill tomorrow, on May 31.