Bit Digital Seeks Crypto Tax Shelter in Iceland
The company will relocate a significant portion of its mining machines to Iceland and Canada, with the majority remaining in the US
Andy.LIU/Shutterstock modified by Blockworks
Bitcoin miner Bit Digital is strategically expanding its operations to Iceland as a proactive measure to mitigate potential regulatory risks.
Bit Digital’s decision to establish a presence in Iceland is a response to the proposed crypto mining tax by the Biden administration. This strategic move seeks to enable the company to diversify its base, safeguard its operations and navigate the evolving regulatory landscape. By doing so, Bit Digital aims to ensure continuity in its mining activities amidst the potential implementation of the tax.
Bit Digital’s CEO Samir Tabar told the Wall Street Journal that the company recently invested a substantial $5 million to acquire 2,500 bitcoin mining machines.
The company will deploy and station these newly acquired machines in Iceland, marking the first instance in two years that Bit Digital has chosen to locate its new mining equipment beyond US borders.
After this move, one-fifth of Bit Digital’s mining machines will reportedly find their home in Canada, while the remainder will continue operations in the US.
According to WSJ’s report, Bit Digital says over two-thirds of its mining operations are powered by carbon-free sources. The Iceland operation will specifically rely on hydroelectric and geothermal power sources, according to the company.
In an effort to tackle both economic and environmental implications, the Biden Administration has put forth a proposal advocating for a 30% tax on the electricity expenses incurred by bitcoin mining operations.
The White House’s Council of Economic Advisers (CEA) has stated that crypto mining companies presently evade bearing the complete burden of the expenses they impose on society. These expenses include local environmental pollution, escalated energy costs, and the adverse impacts of intensified greenhouse gas emissions on the climate.
The proposed Digital Asset Mining Energy (DAME) tax aims to tackle this issue by encouraging crypto mining firms to adopt a more responsible approach. The tax seeks to incentivize these companies to acknowledge and internalize the adverse consequences they impose on the community, the CEA emphasized.
Bitcoin miners have expressed their discontent towards the Biden Administration, accusing it of a deliberate endeavor to marginalize the crypto industry.
Riot told Blockworks that it was hard to overstate the negative repercussions that would arise from this proposal. “This proposal would push financial innovation and jobs away from America to other jurisdictions overseas, while causing harmful environmental outcomes and increased national security risks for the United States,” the company added.
As Bit Digital assesses the situation, the company is exploring different jurisdictions in response to perceived “instability.”
The company has scheduled the announcement of its move to take place during the Bitcoin 2023 conference in Miami on Thursday.
Don’t miss the next big story – join our free daily newsletter.