Senator Cynthia Lummis released a report on July 23 condemning the Biden administration’s proposed 30% excise tax on the energy consumed by Bitcoin miners. The report, titled “Powering Down Progress: Why A Bitcoin Mining Tax Hurts America,” argues that the tax would negatively impact both the Bitcoin mining industry and the U.S. energy grid.
Energy Consumption and Sustainability
Lummis, a pro-crypto senator, contends that Bitcoin mining’s energy consumption is comparable to household appliances like tumble dryers. She references the Bitcoin Energy and Emissions Sustainability Tracker, which indicates that up to 52.6% of Bitcoin mining may be emissions-free.
Contribution to Energy Grid Stability
The report emphasizes the role of Bitcoin mining facilities in enhancing the stability of the energy grid. Mining operations provide large, dynamic electrical loads that can be redistributed during peak demand periods. For instance, in 2022, Bitcoin miners in Texas sold 1,500 megawatts of energy back to the grid through a partnership with the Electrical Reliability Council of Texas (ERCOT). A similar contribution was made during winter storm Heather in 2024, where Bitcoin mining infrastructure acted as a Controllable Load Resource.
Environmental and Economic Impacts
Lummis argues that the proposed 30% tax would deter miners from pursuing sustainable energy sources and innovative energy recycling techniques. She cites examples such as sequestering methane from landfills for Bitcoin mining and using volcanic energy in El Salvador. Additionally, the excess heat from a Marathon Digital mining facility in Finland warms a community of 11,000 people, showcasing another efficiency.
In Kenya, Marathon Digital signed an agreement to advance the renewable energy sector, which already provides 80% of the country’s energy needs. This partnership underscores the potential environmental benefits of Bitcoin mining.
Economic Consequences and the Laffer Curve
Lummis warns that increasing taxes on Bitcoin miners could drive the industry out of the United States, reducing anticipated tax revenues. She refers to the Laffer Curve, which illustrates the inverse relationship between tax rates and tax revenue. The senator points to China’s 2021 mining ban, which led to a mass exodus of Bitcoin miners and a significant decline in the country’s hashrate dominance.
