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The excellent student run newspaper, The Michigan Daily, has an article about the necessity of regulating Bitcoin. "Mining" even a single Bitcoin now burns as much electricity as a family would use during about 50 days.
Local grids physically cannot withstand this outrageous consumption of electricity. In foreign countries — where mining farm clustering is more severe — local governments suspect Bitcoin mining farms as the cause of power outages and complete blackouts. Entire neighborhoods are facing power shortages or complete outages as a result of energy grid strain. So far, the reliance on domestic energy has not had adverse effects, but it is only a matter of time before these blackouts begin to take place in the United States, too.
Despite the fatal externality flaws in Bitcoin mining, the industry is left unchecked in the absence of federal or international regulation on its use. Unfortunately, without restrictions on the amount of mining that can occur, there is no clear plateau to the electricity consumption of these constantly updating hardware systems.
Previously:
(2025) Bitcoin Mining is Making People Sick
(2025) The Guy Who Accidentally Threw Away $700 Million in Bitcoin Wants to Buy the Landfill to Find It
(2024) How A 27-Year-Old Busted The Myth Of Bitcoin's Anonymity
(Score: 0) by Anonymous Coward on Saturday November 29, @10:38PM (4 children)
Exactly this ^^^ "...a lot of tax dodging is already in place for these mining schemes"
Be careful what you regulate, there's a good chance that you will wind up regulating something else instead. Taxing assets visible to the government (IRS in USA) won't touch the bitcoin bros that have their assets spread all over in various tax havens.
If instead, your tax happens to snag someone that hit on a high risk commodity trade (or something similar) you really ought to be prepared to give that tax collection back, when their assets drop due to the next trade gone bad...
(Score: 2) by aafcac on Saturday November 29, @11:35PM (3 children)
I doubt that very much. If you're looking to dodge taxes, crypto is a pretty bad way of doing it, the prices are subject to substantial swings and there is no regulation in place to protect against people just stealing all the money. If you want to move large amounts of money around, it's just not a great way of doing it as banks are required to notify authorities of large transfers already, and transfers large enough to be an issue are ones that forensic accountants can track.
In this context, a wealth tax wouldn't do any of what you're talking about. Income taxes are done on a yearly basis, with payments made along the way. Anybody hit by a wealth tax midway through would get the money back at the end of the year if they turned out to no longer owe it. It's really not complicated, that's how the income tax works, the main taxes I know of that don't work like that are things like excise taxes and property taxes where the taxable quantities are known before the tax is paid, with relatively few situations that would require a refund.
If you've got that amount of money from trading commodities that leads to you hitting the cap, you've got plenty of money, it's not really wealth if it's leveraged all to hell and based on a bunch of loans.
(Score: 1) by khallow on Sunday November 30, @03:13PM (2 children)
Will the government pay interest on that?
(Score: 2) by aafcac on Sunday November 30, @09:10PM (1 child)
Why would they? We're talking about a fraction of the taxpayers actual net worth. The government doesn't currently pay interest on refunds unless there's an unusual circumstance that delays the refund being paid. The whole system is intended to avoid having large amounts of money changing hands at the tax deadline.
(Score: 1) by khallow on Monday December 01, @07:41PM
Why would they ever return anything in the first place? Laws.
My point is that taxation thrashing imposes costs on taxpayers especially under your punitive taxation scheme. Suppose someone starts with $50 million and does an edgy trade that temporarily values their assets at $200 million. As part of their continued brilliance, they end up back at $50 million after the drama is over. With that 90% tax rate on assets over $100 million, they now owe Uncle Sam $90 million. Even if the taxman chooses to be generous and not immediately seizing assets and pushing them into bankruptcy court, that's several million in interest and penalties they'll owe.