Cynthia Lummis recently raised concerns about the Biden administration’s suggestion of implementing a 30% excise tax on the energy consumed by Bitcoin miners. She believes that this tax could potentially harm the growing Bitcoin mining industry in the United States. Lummis argues that the concerns about environmental pollution and risks to the energy grid, which the tax aims to address, are unfounded. She asserts that even if the administration’s intentions are genuine, the proposed tax is not the solution. In her report, she criticizes the design of the policy, warning that it could have serious repercussions that go against its intended objectives.
One of the main arguments put forth by Lummis is that the proposed tax could lead to a significant exodus of Bitcoin mining operations from the U.S. to more favorable jurisdictions overseas. She draws attention to the aftermath of China’s ban on Bitcoin mining, where a large portion of the industry either shut down or relocated. Given that energy is a primary cost component in Bitcoin mining, even minor tax increases can have a devastating effect. Lummis paints a bleak picture of a scenario where the U.S. imposes a blanket tax on Bitcoin mining, resulting in a loss of economic benefits and job opportunities for American communities.
Contrary to the administration’s claims that Bitcoin mining poses risks to local utilities and grid operations, Lummis argues that Bitcoin mining can actually strengthen energy grids. She points to examples where Bitcoin miners have collaborated with energy organizations to help stabilize the grid during peak demand. In Texas, Bitcoin miners sold back 1,500 MW of energy during Winter Storms Elliot and Heather, showcasing their ability to balance supply and demand effectively. Data from August 2023 indicates that Bitcoin miners contribute an interruptible load equivalent to 25% of all utility battery storage in the U.S. and Canada. Additionally, a study from 2023 suggested that Bitcoin mining could be ten times more efficient than current technologies in restoring grid frequency during disasters.
Lummis also highlights the sustainability efforts within the Bitcoin mining industry, noting that many mining facilities are transitioning to cleaner energy sources. Reports suggest that a significant portion of the energy used by Bitcoin miners is emission-free and improving over time. Moreover, Bitcoin mining operations are similar to electric vehicles in that they are fully electric and contribute to reducing carbon footprint. Lummis argues that Bitcoin mining shows promise in upgrading America’s energy infrastructure and calls for further study on the impacts of rapid technological deployment.
Lummis emphasizes the economic benefits of Bitcoin mining for underserved areas in the U.S., particularly rural or economically distressed regions. She points out that Bitcoin miners are legitimate American businesses that pay taxes and actively contribute to community development. Overall, the proposed taxes on Bitcoin mining could have far-reaching consequences that extend beyond the industry itself, potentially hindering innovation and economic growth in the country.