Biden proposes 30% tax on cryptominers' power bills The Biden Administration on Tuesday detailed a proposed tax designed to counter the environmental and economic effects of cryptocurrency mining. The Digital Asset Mining Energy excise tax – DAME for short – would require American firms to pay a tax equal to 30 percent of the electricity bill consumed by computers used to make …
Is it because it undermines the petrodollar and the ability from unelected bodies to stealthily print away the value as a method to control the everyday working folk and inflate the assets passively of the rich?
Or do we just ignore that and only look at Crytos downsides in isolation?
All currency is just numbers in databases now.
While that is true, at least fiat currency is subject so some rules and the volume and distribution is such that manipulating value requires a whole government, not one person who, for instance, sells cars. And it costs a heck of a lot less power.
"And it costs a heck of a lot less power"
I'm not convinced. How much computing power goes towards the big stock exchanges?
https://www.popularmechanics.com/technology/infrastructure/a7274/a-transatlantic-cable-to-shave-5-milliseconds-off-stock-trades/
https://www.wsj.com/articles/high-frequency-traders-push-closer-to-light-speed-with-cutting-edge-cables-11608028200
They are chucking money and infrastructure at the trading platforms so they can save a few ms and make more money. How is this much different to crunching hashes?
As for manipulating value... gamestonk, the Muskprat tweeting, the runs on SVB, 1st republic etc?
“a Bitdeer mine was reportedly paid $175,000 an hour to turn off its cryptomining computers during a February 2021 winter storm that downed Texas’s power grid for days, killed 246 individuals and led to the unwelcome shut down of Samsung's semiconductor facility in the midst of a global silicon shortage.”
So I read this as miners are greedy, destroyed infrastructure, killed people and others lost their job.
I was there, and this is B.S. get the facts if you want to change things. Here is what happened:
Wind generation froze, so we lost about 20% of our power
ERCOT went to level 2 and requested conservation. And requested Datacenters to switch to generator (they were paid to do this as well)
Not good enough so they went to stage 3 and shut down industrial plants. Some of which were supplying gas to the generating plants and the gas lines froze and power plants shut down. That was a direct cause of bureaucratic mismanagement. The federal building never lost power even though there was nobody there.
It went to hell within a few minutes after that. We cut power to other states. And thank god someone had the balls to pull the plug on the grid before we lost transformers. It was an issue of overloading the grid tying move the electricity from one side of the state
To the other to replace what was lost.
The ones that were out for weeks was because the ice and snow caused trees to fall on the lines. Again mismanagement, they should have need maintained.
Want it to happen again? Believe the B., regardless of what you think of coin mining.
“a Bitdeer mine was reportedly paid $175,000 an hour to turn off its cryptomining computers during a February 2021 winter storm that downed Texas’s power grid for days, killed 246 individuals and led to the unwelcome shut down of Samsung's semiconductor facility in the midst of a global silicon shortage.”
So I read this as miners are greedy, destroyed infrastructure, killed people and others lost their job.
That's a rather strained interpretation of the passage from the article. I don't think the text supports it.
3.5bn over 10 years, that isn't a lot of money being raised.
I'd be interested to see the total world energy usage of cryptomining vs normal bit-barns. How much energy do netflix and all the other streaming consume?
The other implication of this is that energy prices are artificially low and do not reflect the true costs of generation.
And look at the rise of e-cigs as a bypass for that tax. Although I'm not sure that raising taxes was a direct causation for the generally falling rates of smoking. Realisation that you might die an early and nasty death did some of that work. But even after the ban in pubs etc you still see large groups huddled outside puffing away.
Has the sugar tax done anything to change eating and drinking habits? In certain areas of the US where specific cities or areas have introduced such a tax people just go out of town to buy their drinks.
Some of the flavours smell GRIM! Walking behind someone with their portable fog machine and you get a waft of some awful chemically fruit flavour... yuk!
This is all part of the cursed monkey paw law of unintended consequences with politicians. The trend for those disposable ones is bonkers!! Yeah, lets design something with a lithium battery that gets thrown away after a few hours.
@A/C
Quote Studies have shown that e-cigs are not only just as bad, but the flavours are used to lure in addicts at a younger age, so I know of a number of countries that are now debating if they should ban it or tax it Unquote.
Talk about clueless...
And
"lure in addicts at a younger age? As they are already addicts, as you admit, how do they "lure them in"? And what is this younger age? I am 68, so any number less than that is a younger age.
And finally
https://www.nhs.uk/live-well/quit-smoking/using-e-cigarettes-to-stop-smoking/
I picked up that discussion in the Netherlands. As that nation seems otherwise quite OK with smoking weird stuff (grin) I found it interesting that especially the youth element had made it all the way to parliamentary discussions which suggests that the issue is far from as trivial as you appear to consider it. I may have phrased it wrong: the idea is to get people to vape at a young age and get them addicted by using sweet flavours, in essence the same sort of scam that gave us alcopops.
As for vaping itself, the liquids tend to contain propylene glycol, glycerol, aldehydes, nitrosamines and various metals which, when inhaled, can lead to lung irritation and lung damage, an elevated risk of cancer (but that seems to be the case with just about anything) and palpitations. Not what I'd call a good replacement for smoking - and,I may add, I have never seen it actually leading to smokers eventually STOPPING as the officially anointed story goes, as far as I can tell they simply replace one addiction with another.
I do know a couple of smokers who have quit using e-cigs but they both wanted to quit and had tried & failed before. The other smokers I know still smoke analogue style and 'can't be arsed with the faf' to quote one of them.
Big tobacco are pushing HARD to get people to vape. When I was looking for my current job I got very good at spotting the e-cig job adverts.
"Big tobacco are pushing HARD to get people to vape."
It's much easier to create and package the vape juice than to grow and process tobacco. Vape juice with nicotine extracted from tobacco plants is still much easier and can be done at scale from a much small building.
I used eCigs to stop smoking and have been off baccy for over 12 years now. I recommend vaping if somebody is serious about quitting smoking. If they just swap one for the other, at least it's better if they smell like a Pina Colada.
"3.5bn over 10 years, that isn't a lot of money being raised."
It's also not something that should be taken seriously. Governments always talk about all of the money that will be generated by some new tax or fee, but in reality, it just makes that operation go elsewhere. There's no particular advantage to running a mining operation in the US other than so the operator can live in the US. They can be anywhere and are as they chase power availability and lowest price for electricity.
The US states that have legalized pot have also taxed and regulated it so much that the illegal dealers that thought they'd have to get out of that business are dancing in the streets. Those states made possession and consuming pot legal and effectively raised the price higher than it used to be. The black market dealers can undercut the retail store prices and make good money. They can also be in possession and not get arrested for it.
I believe the legal pot industry in California is pretty much imploding. The monkey paw curse that comes with most laws. Instead of it being lots of small growers it has turned into a very small number of huge growers. Back in 2016 (I think) Nevada had a prop on the ballot to legalise cannabis possession and selling BUT if the prop passed the law stated you could not grow your own within 20/25 miles of a pot shop. It was basically a power grab. Continue to have illegal weed and potentially end up in gaol or 'legalise' it and then your only choice is to buy our overpriced govt regulated weed. Unless you live WAY outside of the urban areas.
"Instead of it being lots of small growers it has turned into a very small number of huge growers"
If it gets legalized on the Federal level, the big boys will be able to come out and play. Ag, Tobacco, Pharma and liquor all have the market expertise for something like pot. Economy of scale, efficiency and plenty of capital to smooth out starting locations and bad harvests are a big deal. The product itself isn't a big deal, it just has to be good enough and consistent.
The US states that have legalized pot have also taxed and regulated it so much that the illegal dealers that thought they'd have to get out of that business are dancing in the streets.
Oh, citation definitely needed.
I live in a cannabis-legal state, next door to another one. I moved here from a third, and I have friends in a fourth. While I have no interest in the stuff, I know plenty of people who do. I've seen absolutely no evidence that what you claim has any basis in fact, either personally or reported in any reputable publication.
"Oh, citation definitely needed."
I've seen a couple of TV 'investigative reports' where they have talked with illicit drug dealers and I'm just repeating what they've been saying. There are plenty of reports from places such as California where MJ operations are struggling agains't the underground market.
I tried pot decades ago and I don't find it enjoyable. I have far too many other interests to find being stoned a good use of my time. When I was a roadie, I was alway one of the few that didn't smoke pot. I think I had much more fun and actually saw the world in my travels.
OK, now that is actually quite a good question. I honestly have no idea, and it is rather relevant in context.
I guess we'll have to wait and see. Given that it's in the US it will invariably hit the court at some stage, which made me realise we skipped the one fuel that everyone would be happy with:
.. lawyers ..
:)
I think a lot of people are missing the point that all these other "but what about" examples actually have a point to them. Gaming is entertainment, AI provides (dubious) benefits, a regular datacenter presumably provides enough value to customers. As someone above said, when people are re-opening power generation plants just to mine digital snake oil no one benefits other than those at the top of the pyramid.
Specious argument.
Video games are useful. They are a hobby and a pasttime, just like watching TV. Nobody is going to ban TV either.
Funny money is just a burden that does not help society in any way, and gives scum a lot of ammo to actively harm society.
It is a bad thing, and the quicker it disappears, the better.
"funny money" isn't very funny. It's every bit as legitimate as state currencies. It's a traded stock, just like any other, backed by the same thing as any other. "Full Faith" of something that shouldn't be trusted in the first place.
So instead of bitcoin, we should use a dollar backed by a private bank, the "Federal Reserve"? Or the Euro, managed by the central banks?
"funny money" isn't very funny. It's every bit as legitimate as state currencies. It's a traded stock, just like any other, backed by the same thing as any other. "Full Faith" of something that shouldn't be trusted in the first place.
Utter bollocks. Fiat currency might not be backed by, say, gold, but that doesn't automatically lump it in with crypto currencies.
Fiat currencies are backed by a country's government, international reputation for paying their bills, and a military presence to back up that government. Hence fiat currencies are generally somewhat stable. Funny money has none of that, so any imagined value fluctuates wildly.
Oh, it's time to go over this again?
Coin is stock? In a company with no sales, assets, or employees, and a board that anyone can join; where the board members compete to issue themselves stock according to rules which can be changed at any time by a majority of the currently issue rate of the stock? Just TRY to get that approved.
I'm just getting started.
When I read the details of the Etherium VM, I (being a mathematician with a decade in software microprocessor validation and an expert in integer programming) yelled at the air for half an hour. The VM more-or-less led programmers into the bug that triggered the Etherium Fork. And anyone with a background in security, validation, or integer programming would have known this. These instruments are being created by people with callous disregard for the basics.
Moreover, the explicit goal of these instruments is to undermine the sovereignty of the nation states. While I very much want fiat to be replaced with something like a gold standard, I'm not stupid enough to think that if coin ever actually threatened fiat that the entire force of government would come down on it.
But the CAP theorem puts a hard limit on what a (purely theoretical) perfect coin can do. The incumbent system has spent centuries fiddling around to fix C. Coin must be strongly CP, which means that A is in the air. And no one is going to wait an hour to settle average purchases.
The VM more-or-less led programmers into the bug that triggered the Etherium Fork. And anyone with a background in security, validation, or integer programming would have known this.
And it's worth noting that the "smart contracts" running on the chain are even worse. Molly White routinely reports on contracts that were audited by one or more security firms but were exploited nonetheless. Back when Adrian Colyer was doing the Morning Paper blog, he summarized a couple of studies showing just how bug-ridden the things are.
If there are competent developers using good development practices in the cryptocurrency realm, they're damned hard to find.
I was never able to even land a callback from these firms. It's pretty clear that, at least 5-7 years ago, that having a resume' that indicated that you were competent in the relevant disciplines meant no callback.
But don't assume that being a "competent developer" is enough to avoid writing security bugs. As I continually point out, you need a masters in mathematics (from a strong school) to even understand how to produce the required proof. This stuff is hard, even for the small minority of people with the ability to get there.
What's more, its much easier to find some bug than it is to close off all bugs. So fails all around is more-or-less a given for these "smart" contracts.
But the integer wrap thing is bad enough that Hanoln's razor fails to exclude Etherium being a scam from its inception.
If the central banks hadn’t spent decades devaluing the currencies so politicians could buy votes spending trillions on wars and corrupt welfare systems, nobody would have invented crypto. It’s all government’s fault in the first place and now they’re trying to squelch a last ditch attempt by the people to take back control.
The miners have contracts to use surplus energy that CANNOT be stored. That is why they get their power so cheap. And it has NOTHING to do with how many homes could have been using that energy.
A sunny & windy day, with moderate temperatures. Lots of solar & wind energy being generated. Moderate temperatures, so no big heating or cooling demands. More power is being generated than can be consumed. And it cannot be stored! Who really cares if crypto miners get the surplus for cheap, or even for free?
Compare that to a calm and cold night. High energy demand. Now stored energy production needs to be utilized. That energy could be hydroelectric, natural gas, coal, nuclear, etc. No surplus power to buy, and crypto miners shut down. Or if they choose to stay on-line, their contract stipulates excessive power rates.
These power plans are very common in industries with high power consumption. They will get a very cheap rate (compared to us residential folk), but they have a 10-minute warning to disconnect that the power company can enforce a certain number of times per year during peak demand. The industries already have diesel generators to handle outages and they need to exercise them anyway (a sunk cost). Failure to disconnect on time is a several hundred times rate increase.
Had that happen at a business I was involved with when they failed to respond to the disconnect notice. Heads came close to rolling for not flipping the switch. Now it is an automated load transfer.
This is a Biden money grab, pure & simple. The miners get power so cheap already that a 30% tax is trivial to the actual dollars spent. The power company might even eat the 30% tax because this arrangement benefits them too. Which makes this whole proposal & the administrations reasons for it, nothing more than a money grab.
"The Digital Asset Mining Energy excise tax – DAME for short – would require American firms to pay a tax equal to 30 percent of the electricity bill consumed by computers used to make digi-dollars"...
Good thing that the main Crypto-currency that hasn't solved this problem by going proof-of-stake is bitcoin, which for all of it's dinosaur characteristics would not apply as it is in no way linked to the dollar.
No dollars there, just Satoshi's Satoshis.
You can always find a politician that will cook up a "I didn't think this through" piece of legislation that will largely fail at it's intended job.
Congrats, you still won't have a clue who most of the miners are, and most of them are already overseas where it's cheaper. The ones here stateside, as others have mentioned, are often running on renewable and surplus power. So the law could have just banned the one company that bough an old coal plant and had 90% of the effect.
This may help resurrect the re-mixers they have also been trying to shut down. Because anybody that is annoyed at the taxman picking their pocket will just ship out their profits and leave a warehouse full of out of date ASIC miners for the police to clean up after sending their money through an overseas re-mixer to a clean wallet. This tax may slap a few US based bitcoin farmers that want to stay fully legal, but it will just push demand to illegal or overseas operators.
And like most such bills, this can be papered over with some creative accounting, and no effort was made to prevent the miners from using loopholes to avoid the new law without breaking it. They were probably hoping that people would break it and the government could seize their assets for tax evasion, but the big fish are going to swim circles around them, and the police will spend their days raiding small fry dwellers in their mum's basement.
If they said instead "50% tax but only on the fossil fuel element of your miner's electricity mix" then I don't see a problem, only benefits. Crypto miners would be further incentivised to seek green energy as it would be cheaper for them. This would encourage them to move out of city locations to places where they can negotiate direct with wind /solar/hydro generators thus encouraging more such plants to be built or to expand existing ones. This build out should then strengthen state/national energy security as more capacity is then available for emergency provision. Crypto mining should be one of the easiest industries to decarbonise as it can move to where the carbon neutral power is rather than the other way around.
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