After China banned all domestic cryptocurrency mining in June 2021, and then completely banned cryptocurrencies in September, the US filled the void left by China's withdrawal from the crypto space.
GEM Mining, based in Greenville, South Carolina, is a privately held institutional-level bitcoin mining company that has mined more than 600 bitcoins worth more than $25 million in 2021. The CEO is John Warren.
The Southern United States is rapidly becoming one of the fastest-growing destinations for cryptocurrency mining operations and other cryptocurrency-related activities. Attractive tax breaks and affordable renewable energy make states like Texas and Georgia popular destinations for miners who have been expelled from their countries due to government repression. Politicians also enjoy creating jobs and increasing tax revenue in their states.
Cryptocurrency mining is very energy-intensive, but Warren says that GEM Mining has set a goal of achieving full carbon neutrality by 2026. The company currently operates in six states. According to him, the availability of energy plays an important role in choosing areas of the United States for the expansion of the company.
As for the sales tax exemption that makes some states more attractive to mining companies, Warren called Kentucky a pioneer in passing a law on tax benefits for cryptocurrency.
Meanwhile, the Indian government is exploring ways to tax transactions related to cryptocurrencies, including the mining of these digital assets. It is proposing to charge a fixed tax of 30% on profits generated from the sale of virtual digital assets and levying a 1% withholding tax (TDS) on the transfer of such assets above certain thresholds.
Cryptocurrency exchanges already pay GST (goods and services tax) per transaction charged to their customers.
GST laws do not specifically mention cryptocurrencies. Will these digital assets qualify as goods or services? Who will be required to pay tax on goods and services for cryptocurrency transactions? To what cost will GST apply? What will be the tax regime when exchanging one cryptocurrency for another? These issues must be resolved before proposals are submitted to the GST Council for approval.
The tax regime for cryptocurrencies varies depending on the jurisdiction.
In Australia, sales and purchases of digital currencies were taxed on goods and services until July 1, 2017. But this was canceled since consumers who used digital currencies were actually taxed twice – once when buying the digital currency and again when using it in exchange for other goods and services that were taxed. However, any business related to digital currency may be subject to GST.
India, which has about 15-20 million crypto investors with assets over £15,000 crore, should avoid any drastic change in the tax regime of cryptocurrencies.
Countries are also developing new tax laws for the cryptocurrency mining industry.
