A new cryptocurrency tax could make Bitcoin mining more expensive – which is why it’s gaining momentum

If cryptocurrency is the future of finance, miners who rely on dirty fuel could end up paying more than others. However, proponents of a tax on cryptocurrencies believe it could prevent dire consequences of inaction.

What is happening?

As Forbes detailedThe widespread adoption of cryptocurrencies in financial transactions could wreak havoc on the environment, since mining cryptocurrencies requires huge amounts of energy and water.

Moreover, encryption processes can generate enough noise To pose a threat to public healthWhich led to a lawsuit being filed against a facility in Texas.

Although there are different types of cryptocurrencies, Bitcoin is one of the most well-known names. However, validating just one Bitcoin transaction — a process that involves solving complex mathematical puzzles — could eat up the same amount of power as someone in Germany consumes over the course of three months, Forbes reported.

Because of this energy drain, many countries are proposing to tax cryptocurrency mining, and some governments are doing so Operations are already restricted.

Why might cryptocurrency taxes be beneficial?

Fortunately, clean energy solutions such as solar and wind energy They are making progressBut the world still relies heavily on fuels such as gas, oil and coal, which release toxic fumes associated with the gas. Millions of premature deaths annually When burned. In reality, Dirty energy consumption It reaches record levels in 2023According to the Energy Institute.

Ultimately, policymakers argue that taxing cryptocurrency mining could significantly reduce long-term damage by incentivizing miners to adopt renewable, non-polluting energy or improve the energy efficiency of their operations.

For example, a task force at the United Nations in 2024 Climate change The conference proposed a climate tax of $0.045 per kilowatt-hour on miners, a tax that would bring in up to $5.2 billion annually, per kilowatt-hour. Forbes.

The Biden administration has also proposed a 30% tax on electricity consumed by cryptocurrency miners. However the report He speculates It is unlikely that the next administration will be on board.

Speaking at a Bitcoin conference in July, President-elect Donald Trump called on the United States to become the “cryptocurrency capital of the planet,” according to news agency.

What else is being done to limit the damage from cryptocurrency operations?

A number of companies are actively working to reduce or offset pollution from cryptocurrency operations, including Alephium, which Blockchain is “less proof of work”. More energy efficient.

Meanwhile, the transformation of the Ethereum cryptocurrency network to a “proof-of-stake system” has led to an incredibly promising reduction in energy consumption – More than 99.9%.

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