Cynthia Lummis says the Biden administration’s proposal for a Bitcoin mining tax is counterproductive and will hit the Bitcoin economy

Senator Cynthia Lummis criticises the Biden administration’s proposal to impose a 30% tax on electricity used by Bitcoin miners.

She argues that this tax could harm America’s thriving Bitcoin mining industry, which gained prominence after China banned the activity in 2021.

America's Bitcoin Mining Boom

Following China’s ban, the U.S. became the global leader in Bitcoin mining, attracting significant investments and top talent due to its robust energy market and stable legal environment，bringing over $4 billion in tax revenue to America.

Bitcoin mining tax could impact U.S. mining industry

The proposed tax threatens to drive Bitcoin mining operations out of the U.S. Lummis believes the Treasury’s rationale for the tax is outdated, failing to account for modern energy use and technological advancements.

Lummis argues that the proposed tax could backfire, harming the objectives it aims to achieve. The administration claims Bitcoin mining threatens local utilities’ grid operations but offers no evidence.

Studies indicate that Bitcoin miners can actually stabilise energy grids by adjusting their usage based on supply and demand.

The development of the mining industry in the United States

Lummis’s report highlights the economic advantages of Bitcoin mining, including job creation, support for energy infrastructure, and innovation. She warns that the tax could undermine these benefits and damage a growing sector of the economy.、

Since its inception in 2009, Bitcoin mining has evolved from small-scale operations to large industrial efforts. The U.S. became a prime location for mining due to its cheap, reliable energy and strong legal protections. Lummis notes:

“Bitcoin miners are lawful American businesses that pay standard taxes and bring significant economic benefits to underserved areas.”

The Bitcoin Mining Council reports that Bitcoin miners provide significant interruptible load capacity, comparable to utility battery storage.

Research suggests Bitcoin mining can effectively restore grid balance after disasters, outperforming existing technologies.