Bit Digital turns to Iceland as a tax haven for crypto
In response to the Biden administration’s proposed crypto mining tax, Bit Digital has strategically moved a significant portion of its mining machines to Iceland and Canada while keeping the majority within the United States.
The company’s decision to establish a presence in Iceland reflects its proactive approach to navigating the potential impact of the proposed tax legislation on its operations.
Moving beyond the United States
Bit Digital, under the leadership of CEO Samir Tabar, has made a noteworthy investment of $5 million to secure 2,500 bitcoin mining machines, as reported by the Wall Street Journal.
In a significant departure from its previous practices, the company has chosen to deploy these newly acquired machines in Iceland, marking the first time in two years that Bit Digital has expanded its mining operations beyond the United States.
As part of this strategic move, approximately 20% of Bit Digital’s mining machines will be stationed in Canada, while the majority will continue to operate within the United States.
According to information in the Wall Street Journal report, Bit Digital claims that carbon-free energy sources power more than two-thirds of its mining operations. Specifically, the Iceland operation will heavily rely on hydroelectric and geothermal power, aligning with the company’s focus on sustainable mining practices.
The company has scheduled the announcement of its move during the Bitcoin 2023 conference in Miami.
A proactive response
The decision to establish a presence in Iceland comes after the Biden administration has proposed a 30% tax on electricity expenses incurred by bitcoin mining operations. This view was reaffirmed in a blog post released last week.
The post supported the administration’s proposed cryptocurrency mining tax, initially introduced in the president’s budget.
The blog not only showcases a misunderstanding of the crypto mining sector but also conveys the belief that the United States is incapable of leading in energy innovation and meeting the rising energy demands.
The proposed tax, known as the Digital Asset Mining Energy (DAME) excise tax, aims to impose a 30% surcharge on the energy consumed by computers involved in cryptocurrency mining. According to the White House’s estimations, this tax is projected to generate $3.5 billion in revenue over the span of ten years.
It is uncertain whether other companies will follow Bit Digital’s lead, however, if they do, it is possible that governments or regulatory bodies may take note of the tax policies in their own area and make adjustments accordingly.