To avoid the proposed crypto mining tax by the Biden administration, Bit Digital has relocated a large number of its mining machines to Iceland and Canada, while still keeping most of them in the United States.
By establishing a presence in Iceland, Bit Digital is taking proactive steps to deal with the potential effects of the proposed tax legislation on its operations.
According to the Wall Street Journal, Bit Digital, led by CEO Samir Tabar, has invested $5 million in acquiring 2,500 bitcoin mining machines.
Bit Digital has made a notable change by deciding to use the recently acquired mining machines in Iceland. This is a departure from their previous approach as it’s been two years since they expanded their mining operations outside of the United States.
— Crypto Crib (@Crypto_Crib_) May 19, 2023
As part of their strategy, around 20% of Bit Digital’s mining machines will be located in Canada, while the rest will remain in operation within the United States.
According to the Wall Street Journal report, Bit Digital states that over two-thirds of its mining operations are powered by carbon-free energy sources. For the Iceland operation, the company will primarily use hydroelectric and geothermal power, which aligns with their commitment to environmentally sustainable mining practices.
The company has planned to announce its move during the Bitcoin 2023 conference in Miami.
A proactive action.
The choice to operate in Iceland was made in response to the Biden administration’s proposal to impose a 30% tax on the electricity costs of bitcoin mining. This position was reiterated in a recent blog post.
The blog post expressed support for the proposed tax on cryptocurrency mining, which was first introduced in the president’s budget.
The blog post not only reveals a lack of understanding about the crypto mining industry but also suggests that the United States is unable to take the lead in energy innovation and meet the increasing energy needs.
The proposed tax, called the Digital Asset Mining Energy (DAME) excise tax, intends to levy a 30% additional charge on the energy used by computers in cryptocurrency mining. The White House estimates that this tax will generate $3.5 billion in revenue over a period of ten years.
It is unclear if other companies will adopt Bit Digital’s approach. However, if they do, governments or regulatory bodies may pay attention to tax policies in their respective regions and consider making changes accordingly.
Important: This article is intended solely for informational purposes. It should not be considered or relied upon as legal, tax, investment, financial, or any other form of advice.