Crypto “mining” is the process of solving extremely complicated mathematical problems that verify transactions in a crypto currency like Bitcoin. The blockchain concept that underpins crypto currencies relies on third-party “miners” – who are decentralized and unconnected – to perform this function. When a Bitcoin (or other crypto) problem is solved, the successful “miner” is rewarded with a predetermined amount of crypto. Most of the mining is done in gigantic computing centres that use massive amounts of electricity. It is estimated that the electricity consumption related to Bitcoin alone is more than the entire usage in a country the size of the Netherlands.

This type of volatile power consumption is not only a source of pollution, but it can raise electricity prices and cause service interruptions for the people who live in that area. Most of these crypto mining centres were originally located in China, but that country banned them in 2021, for the reasons noted above. This caused most of the miners to relocate in the US where there are currently no restrictions. But the US is now considering a new 30% tax on the electricity used in these operations. The Digital Asset Mining Energy excise tax is based on the fact that crypto mining firms are not paying for “the full cost they impose on others, which includes environmental pollution and high energy prices.” In addition, local power companies are taking a risk if they decide to upgrade their equipment to handle the extra usage, because miners can easily move away to another location.

Those who support crypto say that other industries such as steel manufacturing also use large amounts of electricity, but they are not taxed for their energy consumption. In response the government notes that “crypto mining does not generate the local and national economic benefits typically associated with businesses using similar amounts of electricity." A business that actually makes things provides thousands of jobs, and boosts the local economy. Crypto is merely a type of investment speculation that brings no benefits to the places where it does its mining.