There's a real danger living in a country where tech-illiterate elderly politicians create policy.
Biden looks ridiculous talking about this elderly-brained fantasy of raising $3.5 billion by taxing crypto miners.
"One new proposal in this year’s Budget, the Digital Asset Mining Energy (DAME) excise tax, is an example of the President’s commitment to addressing both long-standing national challenges as well as emerging risks – in this case, the economic and environmental costs of current practices for mining crypto assets (crypto mining, for short"). After a phase-in period, firms would face a tax equal to 30 percent of the cost of the electricity they use in crypto mining."
Occasionally there's moments with some of our older politicians where I'm reminded just how bad it is - of course I don't expect them to understand crypto, but the not grasping that this business can operate anywhere means he doesn't understand the basics of the internet.
The press release goes on to gloat that it will "raise $3.5 billion in revenue over 10 years".
Another Way To See This: LEAVE The US, Increase Profits by $3.5 Billion Over 10 Years..
I can only imagine Biden thinks these companies will 'have to stay where the mines are - you can't take a mine with you' - this is actually slightly less stupid than believing you can tell a relatively small industry "you'll make $3.65 billion more if you leave the US" and think they will stay.
This exposes another cause for concern - no advisor told him miners can set up operations anywhere in the world where there's internet access and electricity? If one country imposes heavy taxes or regulations, miners can easily relocate to a more favorable jurisdiction.
Once the global tech leader, America has become the grumpy, confused old man yelling "get off my lawn" while the house next door is having a BBQ and invited over the entire neighborhood.
Because that's what is happening - countries with younger leaders, who aren't afraid of technology are actively competing to bring in the companies the US is scaring away.
Some mining companies bring in a substantial amount of money, and the administration seems oblivious to the fact that their proposal is one that simply delivers this money to other countries - and the $3.5 billion someone misled the President in to believing just isn't coming. I'd be shocked if 10% of that is collected.
These blunders in policy decisions, especially in areas as dynamic as cryptocurrency, can have long-lasting implications for a country's economic and technological future.
Ironically, Bad For The Environment As Well...
Politicians are satisfied if they do something that gives the 'appearance' of helping the environment. When the United States increased emissions standards in the 90s and early 2000s, many of its factories closed, and their workers lost their jobs. But the companies that owned those factories still needed to make whatever product they sold, so the factories simply popped back up in places like China - where there were virtually no environmental regulations at all.
The end result was the same product, more pollution then ever before when manufacturing it, and the finished product now needed to be shipped to the United States to sell.
Only since 2021's crypto ban in China has the US been the leading country for crypto mining, which was also an environmental success, thanks to states like Texas and Florida Chinese mining companies, previously running on coal fueled power plants, were now in the US and primarily powered by natural gas.
Sure, crypto has had its ups and downs - but none of crypto's downs came close to the 'dot com bubble' bursting which wiped out $7.5 TRILLION from the market, and people's retirements. The market cap for all crypto was about 30% of that at it's high.
While thousands of companies went under, it left the United States with Google, Microsoft, Apple, Intel, Cisco, Adobe, which have since made up for the losses of every failed tech startup and then some.
Strange how no one is saying 'we should have banned American's from investing in tech startups' even with losses that dwarf any failed crypto.
I'm located in Silicon Valley, and similar mistakes are driving companies away from here already.. Tesla's moving to Texas, and we're already seeing when a big name tech company needs more office space, they're not building it in California. This is because the workers with the skills they need are turning down offers to work here, and taking jobs with lower pay in other states - because once you factor in rent prices and taxes, they have more money left over even with a smaller paycheck in another state.
While California's Mismanagement Pushes Companies to Other States, Biden's Plan Brags that No State Will be Able to Escape a Federal Nation-Wide Tax...
The tech industry, crypto included, has shown they're willing to pay taxes when the tax rates are reasonable and fall somewhere near the average for other businesses. But adding an additional 30% to a company's already largest expense (electricity) will make it hard to resist when smarter countries call offering tax breaks.
One final thing to consider - there's a number of publicly traded crypto mining companies in the US, I wonder how investors would react if they were invested in a company that began paying this new tax, while competing companies that relocated were obviously benefiting from it when comparing earnings reports. Would we see share holders demanding companies free themselves of this optional 30% increase in expenses?
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