Bitcoin miners can breathe a sigh of relief as the White House plan to levy heavy taxes on the sector falls apart after a major deal between President Biden and senior Republicans aimed at preventing the US from defaulting on its debt.
The tax was originally introduced by the White House in early May as part of a bill titled the Digital Assets Mining Energy Excise Act. The bill, known as the DAME Act, would impose a 10% tax on the electricity consumed by Bitcoin and other crypto miners starting in 2024, with that figure set to rise to 30% by 2026.
While the White House has yet to provide another update on the tax proposal, Republican Congressman Warren Davidson of Ohio said Sunday the mining tax would not go into effect.
“Yes, one of the victories is the blocking of the proposed taxes,” Davidson said tweeted On Sunday, a crypto executive responded that the excise tax was not included in a new bill detailing the conditions for raising the so-called debt ceiling. The exchange came after Davidson tweeted a link to the bill, which reflected a compromise between the White House and Republican leadership on raising the federal debt limit.
The Treasury Department did not immediately respond to a request from Fortune on the status of the DAME Act, but the legislation appears to have no way forward for now, as another senior Republican said the debt ceiling agreement “blocks Democrat calls for new taxes and. “Reject all Biden’s proposed $5 trillion tax hikes.”
In its original proposal, the White House claimed that the DAME Act would have generated $3.5 billion in revenue over a 10-year period.
Cryptocurrency mining has become a prominent target of environmentalists and Democratic policymakers in recent years, who claim it burns unnecessarily large amounts of energy while bringing few benefits — and few — to the cities where mining operations are based in some cases, higher utility bills for consumers. Crypto advocates, in turn, claim that the environmental arguments against bitcoin mining are overstated and that critics misunderstand the industry, which in the US is largely based on renewable energy
While Bitcoin requires a significant amount of energy to operate, newer blockchains use relatively little electricity in comparison, as they are based on a different system called Proof of Stake. This includes the second most popular cryptocurrency, Ethereum, which introduced Proof of Stake last fall.
Even if the White House plan to tax crypto mining seems dead for now, the debt ceiling agreement still faces hurdles and must pass both the House and Senate before it becomes law.