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Bitcoin Miner Bit Digital Expands to Iceland Amidst Looming U.S. Tax Regulations

Bit Digital, a firm specialized in bitcoin mining, has made a purchase of 2,500 fresh bitcoin mining machines for a total of $5 million. This acquisition represents the company’s first deployment of newly acquired machines outside the United States in a period of two years, as they will be sent to Iceland for operation.

This choice by Bit Digital can be seen as a strategy to reduce regulatory exposure in response to the proposed crypto-mining tax by the Biden administration. Iceland is famous for its economical geothermal power and low crime rate, making it an attractive location for bitcoin mining. It is expected that Iceland will use more energy for “mining” bitcoins and other digital currencies this year than it does to provide electricity to its homes.

Benefits of Mining in Iceland 

It comes as no surprise that Bit Digital has opted for Iceland as its location, given the country’s reputation as a sanctuary for bitcoin miners. Iceland’s plentiful geothermal and hydroelectric power facilities offer reasonably priced sustainable energy, and the inherent cooling of computer servers makes it an ideal location for large virtual currency ventures.

The abundance of renewable energy sources in Iceland has attracted the attention of thieves looking to steal bitcoin mining equipment. 

However, it’s noteworthy that a bitcoin mining facility in Reykjavik, Iceland experienced a loss of more than 600 computers, valued at $2 million, in January 2018 due to theft.

Crypto Tax by US 

The Biden government has put forth a proposal to impose a 30% tax on cryptocurrency mining as a means to mitigate the economic and environmental problems associated with it. The tax is aimed specifically at the electricity consumption involved in mining activities. The White House’s goal is to regulate the adverse environmental and economic impacts of this practice.

 According to sources, the application of Biden’s suggested taxation on crypto mining will have a more significant effect on bitcoin in comparison to other digital currencies. The reason for this is that bitcoin is the only prominent crypto network that uses PoW as its fundamental mechanism for getting consensus.

 The Digital Asset Mining Energy (DAME) excise tax is included in Biden’s proposed 2024 federal budget and would necessitate a 30% surcharge on all energy consumed by computers involved in crypto mining. The White House has estimated that this tax would generate $3.5 billion in revenue over a 10-year period.