Mining

Missouri passes crypto mining protection law

Published

2 weeks ago

March 7, 2023

Zeynep Geylan

Missouri passes crypto mining protection law Zeynep Geylan · 6 hours ago · 2 min read

The “Digital Asset Mining Protection Act” will be voted on the Missouri House floor before moving to the Senate.

2 min read

Updated: March 7, 2023 at 8:46 pm

Cover art/illustration via CryptoSlate

The U.S. state of Missouri passed the “Digital Asset Mining Protection Act” on March 7 to protect the rights of crypto miners.

The bill won’t allow state and political subdivisions to halt crypto mining nodes’ work. The bill summary stated:

“The “Digital Asset Mining Protection Act” “precludes the state and political subdivisions from prohibiting the running of a node or series of nodes for the purpose of home digital asset mining,”

The bill ensures that crypto-mining companies are subject to the same laws as other businesses so that specific laws can’t target them. It primarily aims to prevent energy companies from applying discriminatory tax rules to mining corporations.

The bill also mandates the state to give “proper notice” before making adjustments to the rules related to crypto mining. Naturally, this bill legalizes crypto mining and allows institutions to participate in mining activities within zones approved for industrial use.

The bill passed with a unanimous vote of 12 to zero in favor, securing the support of both Democrats and Republicans. However, this is an amended version of the bill, which means it needs to be passed by the Missouri House committee before moving to the Senate, as Blockwork reports.

Mining in the U.S.

The U.S. is one of the leaders in crypto mining. According to the data from October 2022, two mining pools in the U.S., Foundry, and Antpool, account for over 51% of the global hash rate. Hosting over 30 mining companies within its borders, Texas comes forward as the mining hub of the country.

The most recent development on the mining front within the U.S. came from Mississippi. In February, the Mississippi senate passed a legislative bill that legalized Bitcoin (BTC) mining within the state. Similar to Missouri’s Act, Mississippi’s bill also ensured that mining companies weren’t subjected to any discrimination.

A contrasting attitude towards mining came from New York in June 2022. The New York senate passed a bill that bans any new proof-of-work (PoW) mining operations from starting for three years.

Bitcoin

Signature Bank closure highlights benefits of holding Bitcoin, says Marathon Digital

Published

1 week ago

March 13, 2023

Oluwapelumi Adejumo

Signature Bank closure highlights benefits of holding Bitcoin, says Marathon Digital Oluwapelumi Adejumo · 2 hours ago · 1 min read

Marathon said its 11,000 BTC holdings provided it “financial optionality that extends beyond the traditional banking system.”

1 min read

Updated: March 13, 2023 at 6:48 pm

Cover art/illustration via CryptoSlate

Bitcoin (BTC) miner Marathon Digital said its funds held at Signature Bank are safe and available for use despite the closure of the bank.

In a March 13 statement, the BTC said $142 million in cash deposits at the bank and has access to the funds for treasury purposes.

Besides that, Marathon said it had no business relationship with the other embattled crypto-friendly bank, Silicon Valley Bank.

Marathon Digital added that it held 11,000 Bitcoin as of March 13. The company added that this provides “financial optionality that extends beyond the traditional banking system.”

Signature Bank was closed on March 12 by the New York Department of Financial Services. The state agency appointed the Federal Deposit Insurance Corporation (FDIC) as the receiver.

The FDIC has since moved all Signature Bank assets and deposits to Signature Bridge Bank, a full-service financial institution that it will operate while seeking potential bidders for the bank. FDIC also stated, “All depositors of this institution will be made whole.”

Following the news, MARA stock rose 18% today to $6.36, according to Yahoo Finance data.

Other firms with exposure to Signature

Stablecoin issuer Paxos said it held $250 million at Signature Bank. The firm added that it has insurance for private deposits over the balance it held at the failed bank.

However, Paxos assured that all its customer deposits would be fully guaranteed and expected to be made available to customers when the banks open.

Coinbase also revealed that it held $240 million with Signature Bank as of March 10. The firm also had assurance that it could recover these funds when the bank opened.

Another stablecoin issuer, True Coin, had $852.27 million at the failed bank. The firm maintained that this would not affect its user’s minting and redemptions of TUSD.

1031 exchange rule

Biden Budget Proposal Targets Crypto Investors Using Like-Kind Exchange Provision; Plan Aims To Tax Crypto Miners 30%

Published

2 weeks ago

March 10, 2023

Jamie Redman

Biden Budget Proposal Targets Crypto Investors Using Like-Kind Exchange Provision; Plan Aims To Tax Crypto Miners 30%

On Thursday, the Biden administration released the U.S. president’s 182-page budget proposal for the fiscal year 2024, which aims to “grow the economy from the bottom up and middle out.” The budget includes an $835 billion increase in military spending, but the administration claims it will reduce the deficit by $3 trillion over the next decade. Additionally, the budget proposes “closing a loophole that benefits wealthy crypto investors” and plans to gradually introduce a 30% tax on the electricity used in cryptocurrency mining.

Biden Budget Aims to Reduce Deficit by Raising Taxes

Unlike many past U.S. presidents who promised no new taxes, president Joe Biden has no issue with imposing more taxes on American people and businesses. However, the Biden administration claims that the higher taxes are targeted at the country’s wealthy, and the latest budget proposal aims to add a 25% minimum tax on the wealthiest Americans.

The White House budget proposal is subject to review, modification, and approval and is not yet finalized or set in stone. Biden, of course, will be running for reelection next year and faces the possibility of losing to another candidate. President Biden’s budget plan calls for increasing the corporate tax rate from 21% to 28%, as well as raising taxes on fossil fuel companies involved in oil and gas.

The administration contends that the current tax code provides wealthy Americans with “special treatment” that enables many of them to pay lower rates through tax planning and “loopholes,” according to the Biden administration’s budget fact sheet. The plan also addresses “wealthy crypto investors” and real estate investors. In the “Closes Tax Loopholes” section of the Biden budget, the plan references Section 1031 of the Internal Revenue Code.

The Internal Revenue Code section 1031, sometimes referred to as a “like-kind exchange,” permits individuals or businesses to delay paying taxes on certain types of property they exchange for similar property. This tax provision was first introduced in 1921.

Eliminating the like-kind exchange provision or the 1031 exchange rule could have serious consequences for crypto investors. This could result in higher tax bills, administrative burdens, and could potentially discourage investment in the market. President Biden’s budget proposal could lead to a substantial rise in tax bills for active crypto traders who frequently engage in trading.

2017 Changes to 1031 Exchange Rule; Biden’s Plan Aims to Tax Crypto Miners

The 1031 exchange rule underwent significant changes in 2017 with the passage of the Tax Cuts and Jobs Act. The rule was restricted to real property, and a transition rule was introduced to provide a grace period for taxpayers who had already engaged in like-kind exchanges of personal property. Additionally, the 2017 changes established a threshold for taxable gains.

President Biden’s budget proposal contends that the “ultra-wealthy” exploit these tax incentives provided by the provision to “accumulate tax-free fortunes.” However, some argue that not only billionaire types benefit from the like-kind exchange provision. It also offers lower-income and middle-class investors the chance for tax deferral, which can enhance their liquidity and diversify their investments.

President Biden’s budget plan also targets cryptocurrency miners with taxes by proposing to impose an excise tax on crypto mining operations that consume electricity. The tax would gradually increase to 30%. According to the proposal, “firms engaged in digital asset mining would be required to report the amount and type of electricity used as well as the value of that electricity if purchased externally.”

The proposal also states that “firms that lease computational capacity would be required to report the value of the electricity used by the lessor firm attributable to the leased capacity, which would serve as the tax base.” Beginning from the taxable year following December 31, 2023, the proposal would implement a phased excise tax at rates of 10%, 20%, and 30% over a period of three years.

Tags in this story

1031 exchange rule, Biden, Biden provision, bitcoin tax, BTC tax, budget, computational capacity, corporate tax, Crypto investors, Crypto tax, Cryptocurrencies, Cryptocurrency, deficit, Digital Assets, Digital Currencies, Diversification, Economy, Electricity, excise tax, fossil fuel, Internal Revenue Code, IRS, Joe Biden, like-kind exchange, Liquidity, middle-out, Military Spending, mining, phased tax, presidential race, rates, Real estate, Tax, tax bitcoin, tax BTC, tax crypto, tax deferral, tax incentives, tax loopholes, tax planning, taxable gains, U.S. president, ultra-wealthy, wealthy Americans, White house

What do you think about Biden’s budget plan that raises taxes in order to lower the deficit burdens? Let us know your thoughts in the comments section below.

Jamie Redman

Jamie Redman is the News Lead at Bitcoin.com News and a financial tech journalist living in Florida. Redman has been an active member of the cryptocurrency community since 2011. He has a passion for Bitcoin, open-source code, and decentralized applications. Since September 2015, Redman has written more than 6,000 articles for Bitcoin.com News about the disruptive protocols emerging today.

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Bitcoin

Bitcoin hashprice drops as miners face possible 30% energy tax

Published

2 weeks ago

March 10, 2023

Oluwapelumi Adejumo

Bitcoin hashprice drops as miners face possible 30% energy tax Oluwapelumi Adejumo · 3 hours ago · 2 min read

Jaran Mellerud said Bitcoin’s mining difficulty and hashrate has soared by more than 20% in 2023 while the asset’s decline has erased most of the gains it made early in the year.

2 min read

Updated: March 10, 2023 at 1:53 pm

Cover art/illustration via CryptoSlate

Bitcoin’s (BTC) hashprice has significantly plummeted in recent weeks, dropping to its early January levels — a potential sign that the mining bull run might be over.

Hashprice measures the market value for each unit of hashing power. BTC’s price determines Hashprice’s value alongside the network difficulty and transaction fees.

With BTC’s network difficulty soaring to new all-time highs and the asset’s value dropping to a two-month low, miners could face a hard time as hashprice fell to $61.38/P.H./Day, according to hashrate index data.

Source: Hashrate Index/Jaran Mellerud

What does this mean for miners?

Hashrate Index researcher Jaran Mellerud said Bitcoin’s mining difficulty and hashrate soared by over 20% in 2023 following the digital asset improved price performance.

He noted that BTC’s performance incentivized many marginal operators to turn on their machines, which increased market competition.

However, the flagship digital asset’s crash below $20,000 has erased half of the gains it made in 2023. This means miners face a 2022-like situation where BTC’s falling value made mining unprofitable.

Mellerud highlighted that BTC’s hashrate would likely increase as more miners plug in their machines in the coming months. Already, several miners have revealed intentions to increase their mining capacity by bringing more devices online.

Mellerud added:

“If hashprice is to stay at the current level, the Bitcoin price must increase considerably… The recent hashprice development shows the importance of hedging revenues.”

Miners face a 30% crypto-mining tax

U.S.-based BTC miners’ situation could be compounded by the proposed 30% taxation on all energy costs involved in cryptocurrency mining.

U.S. President Joe Biden’s 2024 budget plan included a new tax proposal on crypto mining. The government said crypto mining activities require colossal energy usage and could hurt the environment. It added that mining activities could raise electricity prices and cause uncertainties around local energy utilities.

The CEO of Satoshi Act Fund, Dennis Porter, described the proposal as “unfair and targeted discrimination.” He added that the taxation would “effectively kill Bitcoin mining in the USA.”

Public miners’ stock tank

Following the series of events, the stocks of several Bitcoin miners have tanked in the last 24 hours.

According to Google Finance data, Riot’s stock is down 12.22% to $5.53, while Hut 8 shares fell 14% to $1.75. Marathon Digital and Canaan also saw their shares decline by 11% and 7%, respectively.