Crypto Tax Compliance Remains Minefield as IRS Leaves Key Questions Unresolved
U.S. Senate panel probes how crypto mining increases energy consumption – Alaska Beacon
Years of delay on taxing crypto gains are likely to have cost the government billions of dollars. That’s about to change with a new law going into effect in 2024.
Porter, who first discovered Bitcoin (BTC) in 2017, told Cointelegraph his path advocating the benefits of mining has taken him to support bills in at least six U.S. states, with federal lawmakers also in his crosshairs. The Satoshi Action Fund CEO met with U.S. senators and representatives on Jan. 25 in support of proposed legislation aimed at eliminating discrimination against miners.
Crypto mining operations in the United States have many critics among lawmakers and citizens alike, with complaints about the energy consumption of proof-of-work cryptocurrencies like Bitcoin as well as the noise pollution from crypto-mining machines. In November, New York Governor Kathy Hochul signed into law a two-year moratorium on PoW mining.
The conversations between Porter and members of Congress — including Senators Ron Wyden, Cynthia Lummis and Ted Budd — marked the first time the Satoshi Action Fund had stepped up in person to the national stage in defense of BTC miners. However, the organization has also stood behind bills being considered in New Hampshire, Montana, Mississippi, Missouri and Oklahoma.
Carbon emissions are overheating the planet, and Americans are feeling it this summer, with unprecedented wildfires, heat waves, floods, and droughts. The most significant source of planet-heating carbon emissions is burning fossil fuels for energy.
Policymakers looking to curb emissions are turning their attention to cryptocurrency mining (validating cryptocurrency transactions on a blockchain network that stores a mind-boggling amount of data), which requires tremendous energy. Bitcoin, for example, requires between 67 and 121 terawatt-hours a year. For comparison, the entire country of Germany needs just over 500 terawatt-hours a year. Much of the energy used by crypto miners is carbon-based, about 60 percent globally and 34 percent in North America. Bitcoin generates an estimated 22 million metric tons of carbon emissions every year, equal to the country of Jordan’s total emissions.
That’s stark. But it’s not the crypto mining that’s hurting us. It’s the carbon emissions. If only there were a tax policy that could help limit the damage of climate change, lower the budget deficit, and even fund rebates to Americans. Any ideas?
The Tax Hound, publishing once a month, helps make sense of tax policy for those outside the tax world by connecting tax issues to everyday concerns. Have a question or an idea? Send Renu an email.
In other crypto news, Frax Finance will put out its new stablecoin, the Frax Price Index, to holders and stakers of its various tokens, CoinDesk reported Friday — but they have to own one already.
For example, the numeric equations/mathematical problems to verify the blocks are difficult to solve (having a 64-digit hexadecimal solution known as a “hash”), and requires sophisticated mining equipment (e.g., high-powered computers, servers, software, etc.) which use a substantial amount of energy to perform these processes – the more energy, and the faster hardware and software used, the better the chances to solve the complex problems and get (digitally) paid. As a result, the major players in this space instead operate out of largescale facilities with industrial-level energy and resources which allow miners using these facilities to increase their “hashes” produced per second, known as their “hashrate.”
“Crypto asset mining is hardly alone in being an industry reliant on large data server banks,” Ricketts later continued. “Finance, technology, government, academia and many others use significant amounts of electricity to power their computing needs. We should be providing the tools for open competition in a free market and not allowing politicians or bureaucrats in Washington D.C. to pick winners and losers.”
Cheap electricity in Nebraska — 100% powered by publicly owned utilities — makes the state an attractive option for the crypto data centers, where acres of extremely fast computers encased in what look like metal shipping containers attempt to guess long combinations of numbers to verify a new transaction, some at speeds of up to trillions of guesses per second.