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Marathon Digital Holdings CEO on White House's Crypto Mining Tax Proposal

May 4, 2023

The White House has put forward a proposition to impose a punitive tax on cryptocurrency mining operations due to perceived societal impacts. Fred Thiel, CEO of Marathon Digital Holdings, offers his perspective. Thiel contends that the energy consumption of Bitcoin miners is a small fraction of global energy usage, with a majority sourced from renewables. He questions the rationale behind the proposed 30% tax, highlighting the existing backlog in renewable energy transmission and the relatively minor energy consumption of Bitcoin compared to other sectors. Thiel suggests that the tax could potentially prompt miners to relocate offshore, as several nations are adopting crypto-friendly regulatory frameworks.

00:00 Intro

00:20 White House Crypto Mining Tax Proposal

04:47 Texas SB 1751

Transcripts are autogenerated. May contain typos.


the biting Administration is looking to impose a punitive tax on crypto mining operations for the quote harms they impose on society according to an online post from the White House Council of economic advisors joining us now to discuss that is Marathon digital holding CEO Fred Thiel welcome Fred thank you good to be here good to have you so the administration's blog entry made the case for U.


S tax equal to 30 percent of a minings firm of mining firms energy costs what's your reaction to that proposal uh gosh we mostly don't have enough time for me to go over all the important points but you know think of it this way uh Bitcoin miners use less than a fraction of a percent of energy generated um in the world and the bulk of the energy we use is renewable and what the White House is using here as a cover for this is well we want to make sure that we get to Net Zero it's important for the climate well you know there are a


lot of things that use a lot more energy than point one percent right um and then the other thing to really think about is a lot of the renewable energy in the US today uh is starting to get backlogged because there's lack of interconnect so you know you have a wind farm or a solar farm and you need to connect it to the grid so consumers can get access to the energy there is a two-year backlog on transmission today for renewable projects which means if I invest 500 million dollars to build a solar farm I won't be able to get that


online for minimally two years and guess what this backlog is growing every day and by an estimate that Princeton University did which was published in a Bloomberg article late last year the U.S needs to spend nearly two trillion dollars by 2050 to build out the transmission grid if it has any hope of getting to Net Zero not alone think about the impact of EVS electric vehicles on the grid uh you know EVS are not very clean when you think about it look at the batteries and what building those batteries and you know eventually


hopefully recycling those batteries there's a lot of damage that um these alternative Technologies could cause and Bitcoin is this little tiny spec when you look at the energy consumption so I think this is really just a camouflage way of saying we want to get rid of Bitcoin we want to get rid of crypto the other thing is Bitcoin miners are the users of energy of Last Resort meaning you know you put a 30 tax on energy Bitcoin miners will likely move offshore which is really most probably what the White House wants uh


they really just want to get rid of crypto in this country and I think uh you know this is very much like go back to the early days of the internet oh my God this is a bad thing we don't want it luckily Sounder Minds prevailed and today you know the US is the leader in the internet uh I think if you look at what's going on in Europe the UK you look at Switzerland you look at Singapore you look at Hong Kong um even Bermuda and the Bahamas Now are putting very well structured regulatory Frameworks in place that Embrace crypto


and allow people to leverage it and I think the U.S is really losing out here um and again you know we Hope Sound reminds Prevail but we're already focused on diversification we're building one of the largest data centers in the Middle East and UAE together with our partners there we're evaluating other options offshore but realize that in the U.


S we sit predominantly behind the meter at renewable Farms where there's either wind predominantly wind in our case and we act as an energy consumer when that uh generator can't sell the energy to the grid so if they can't sell it to their grid what are they going to do just lose money and if they lose money then they have to charge consumers more so in reality you know Bitcoin miners act as essentially a revenue stream like an anchor tenant for a real estate Mall developer uh that consumes energy when others can't and won't


um and therefore we provide revenue streams and profits to these developers of solar and wind farms so that they can operate uh successfully and not have to charge consumers high prices well just one last thing I would mention is that um you know energy is priced negatively in this country and this is a study that was done last year 200 million times last year five-minute increments energy was priced negatively meaning there is too much energy meaning they generated more than the grid could take if that's the nature of the market why


are you going to apply an excise tax to minors again it doesn't make logical sense and I really think this is just a you know camouflaged attempt at getting rid of the industry yeah it's interesting you bring up offshoring Fred because in Texas even there are looking there's a bill that's in the Senate I believe the Texas Senator or has already passed the Texas Senate that is trying to put a cap on demand response programs for crypto Miners and Bitcoin miners specifically do you think that is something that will


actually pass because to me as someone who wants my nurses to stay in the United States as an American it does seem a little bit nonsensical to say that demand response programs are bad when it's something that feels like it's good yeah you know the Charlie Munger famously said uh you know look at who benefits from incentives and you'll see kind of what people's agenda is here so SB 1751 which is the proposed law you're talking about essentially caps Bitcoin miners potential participation in demand


response programs at 10 percent well the aircock grid loves Bitcoin miners because we can shed our load up to 99 of our load in 10 minutes which is perfect for the good response and you know today there was an article published in one of the media Outlets talking about you know this summer there's an expectation that the Texas grid is going to use record amounts of energy if you read a little bit further down it says oh by the way they have more than enough generation capacity and the fact that they have


large interruptible um load meaning Bitcoin miners they can shed load whenever the grid is going to need it and they don't expect unless they're unforeseen generation you know um problems uh that there's going to be an issue with this and that's thanks to this large interrupter below that we provide so 1751 will likely not pass um I think uh the people really behind it are a combination of the people who really want to have battery storage technology for Renewables and the other participants in demand response who can


only shed 30 percent of their load and Texas is a unique Market it's like an auction where um aircot says hey I need you to shed load and then whoever does it fastest gets it and I think this is just a question of somebody wanting more of that money and trying to create a legal reason for Bitcoin miners not to be able to participate okay very briefly Fred I have one very quick question for you mining stocks public mining stocks got hammered when Bitcoin got hammered but to a worst degree do you think that


going forward that's going to stop where the Bitcoin mining stocks move more than Bitcoin itself does just very briefly we have 30 seconds yeah yeah so if you just look at the look at you know today for example look at any day when Bitcoin moves typically Bitcoin miners move two to three times as much whether it's up or down and I think you've seen year to date Bitcoin miners have moved more than Bitcoin has so that's a good indicator sure that sounds great Fred thanks for joining us all the time we have today


thanks that was Marathon digital holdings CEO Fred Thiel