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The bipartisan infrastructure bill pushes mining to the edge of extinction even while it seems that the US will remain the undisputed leader in the cryptocurrency mining industry. The Senate initially passed the multi-trillion-dollar bill on August 10 and later approved it by the House in a vote of 220 to 212.
The turmoil began when cryptocurrency provisions were added to the bill at the last minute in late July, with the stated goal of raising an estimated $28 billion by closing the crypto tax gap. The issue revolves around the inappropriate language used in the bill, particularly the term "broker," defined in the statement as any person who provides any service "effectuating transfers of digital assets on behalf of another person."
The bill mandates that brokers report users' names, addresses, and trading activities to the Internal Revenue Service. Cryptocurrency advocates fear that miners and software developers might be considered brokers under the bill's definition, forcing them to supply the IRS with the information they don't have access to.
Will Mining Companies Move Offshore?
Cryptocurrency mining is at the core of proof-of-work cryptocurrency networks. However, many people don't realize that mining is the reason behind the revolutionary features of blockchain technology, including decentralization, verification, security, and accountability.
As of this moment, the crypto mining industry in the US is growing. Several mining companies have chosen to launch their business in the US for several reasons, such as reasonable energy costs, a strong economy, and a stable government. As a result, cryptocurrency adoption continues to rise, translating to more employment opportunities for software developers, marketers, and financial professionals.
The irony is that the infrastructure bill, which aims to boost the country's economy, could force the budding mining industry to crumble. While the US has been the most attractive destination for miners, other countries aren't lagging. For instance, an increasing number of mining companies are setting up camps in the UK. PEGA Mining, a Dorset-based mining company, aims to revolutionize the industry through its eco-cryptocurrency mining practices, relying exclusively on geothermal and hydroelectric sources.
What Is Next?
It's difficult to imagine how crypto would be involved with a bill to construct roads, bridges, and tunnels. However, the bigger picture points to the fact that crypto isn't necessarily targeted. Instead, crypto is caught in the crossfire of politics, seen as an opportunity to generate more funds to support one of the administration's most expensive projects yet.
Despite getting approved by the House without amendments, the infrastructure bill could still be a non-factor in the mining industry. According to the Treasury Department, new rules will be in place once the account is officially passed, providing exemptions to individuals or companies that do not operate as brokers.
While this offers a glimmer of hope, cryptocurrency advocates seek more than just a verbal commitment. But, unfortunately, the controversial language remains open for broader and possibly more devastating interpretations without explicitly clarifying that miners and developers will not be considered brokers.
The preceding post was written and/or published as a collaboration between Benzinga’s in-house sponsored content team and a financial partner of Benzinga. Although the piece is not and should not be construed as editorial content, the sponsored content team works to ensure that any and all information contained within is true and accurate to the best of their knowledge and research. This content is for informational purposes only and not intended to be investing advice.
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