Cryptocurrency mining, especially bitcoin (by far the most important digital asset), has become a topic of conversation since the boom in the sector began.
It is that with the increasing demand for bitcoin and other cryptocurrencies, the process of extracting them has become more popular (and profitable) and has sparked the interest of governments.
Mining is the process of creating new bitcoin (in the case of that crypto) by solving complex mathematical problems with powerful computers. Miners use their computing power to validate transactions on the blockchain, which is the technology behind most cryptocurrencies.
Once a block of transactions is validated, a new block is added to the blockchain and the miner who validated the block is rewarded.
The main reason investors get involved in mining is precisely to earn bitcoin rewards. Mining can be a very lucrative activity, especially when the value of crypto is high.
Problems? Critics of the sector say that it requires a very high amount of electricity to power the computer equipment used in mining processes.
In fact, it is a reality that the electricity consumption of bitcoin mining is higher than the total energy consumption of some small or medium-sized countries.
Bitcoin mining under Biden’s magnifying glass
The novelty of the sector this Friday, March 10, comes from the United States, where it was learned that in the 2024 budget presented by the Joe Biden administration, a special tax is included for crypto mining.
Indeed, if it is approved and becomes effective, United States cryptocurrency miners could have to face a 30 percent tax on the cost of electricity, with the idea of ”reducing mining activity” in that country, says the project that must pass the congress.
As it became known, any company that uses resources, whether owned or leased, would be “subject to a special tax equivalent to 30 percent of the cost of electrical energy used in the mining of digital assets.”
The rule also says that these firms should declare how much electricity they consume and whether or not they are connected to the grid.
The tax would be applied progressivelyat a rate of 10 percent per year until reaching 30 percent.
The document of United States Treasury he talks about an “increase in power consumption attributable to the growth of digital asset mining” and says it could “drive up power prices for those who share a power grid with miners.”
It also says that it “creates uncertainty and risks for local public services.”
In parallel, Biden is proposing a rule (separate from the one involving miners) that would prevent cryptocurrency investors from selling their assets at a loss and buying them back immediately. He hopes to raise $24 billion.
The bitcoin price, after this news, fell below $19,800, from the $21,500 it was trading 24 hours earlier.
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