Congress considers crypto tax reforms, but resource challenges hinder Trump's Bitcoin made in America vision.
In recent months, the buzz around crypto taxation has intensified. With Bitcoin firmly in the spotlight, discussions have ramped up about how lawmakers can better address the challenges facing miners and stakers. The Tax Clarity for Mining and Staking Act, known as H.R. 9175, aims to alleviate some of the burdens placed on these regulatory-approach-to-defi-and-daos-under-mica/">stakeholders. Yet, key infrastructure hurdles remain that could thwart President robinhood-s-layer-2-launch-ignites-ethereum-optimism-amid-political-controversy/">Donald Trump's vision of a "Bitcoin made in America."
The proposed legislation is designed to change how rewards from crypto mining and staking are taxed, providing miners the option to defer taxes on newly minted tokens until they are sold. While this aims to enhance cash flow for U.S.-based validators, the real competition remains largely tied to logistics, such as energy costs and permitting.
Currently, under IRS Revenue Ruling 2023-14, validators face ordinary income tax liabilities on their staking rewards at their market value on the day they receive them. This creates immense pressure, as many clients may not be able to liquidate those tokens immediately. Instead, they find themselves facing unmet tax obligations on assets that they are yet to convert to cash.
Jennie Levin, the chief legal and operating officer at the Algorand Foundation, argues that this scenario presents a significant cash-flow problem. She describes it as a "constant cash drag," where every token reward becomes a potential liability as soon as it is received, regardless of whether it is sold. This problem has become more acute following the Tax Court's ruling in Paschall v. Commissioner, which treated staking rewards as gross income once a taxpayer gains dominion over them.
While H.R. 9175 would offer more favorable treatment for newly minted tokens, offering a deferred taxation framework, it still does not directly address the underlying challenges of energy supply and land availability. Moreover, miners continue to express concerns regarding essential components such as power contracts, permitting timelines, and grid reliability. These external factors ultimately dictate where new mining infrastructure is built.
The U.S. has seen its share of the total Bitcoin hashrate dip, with newer regions like Paraguay and Ethiopia experiencing significant growth. Market figures reveal that as of early 2026, the U.S. accounted for approximately 37.5% of the global Bitcoin hashrate, while countries like Paraguay climbed to 4.3%—an impressive 54% year-on-year increase.
Companies such as HIVE Digital Technologies are exploring various global opportunities, strategically selecting locations based on factors like power prices and grid stability. CEO Aydin Kilic emphasizes that the first step is securing land and establishing reliable power relationships. These initial considerations often overshadow tax incentives when deciding where to set up crypto operations.
In regions like Paraguay and Sweden, HIVE has successfully secured long-term energy contracts that not only enable it to operate efficiently but also align with future expansions. Their Yguazú campus in Paraguay, for instance, reached a significant milestone by establishing deals with ANDE for 300 MW, benefiting from pre-existing relationships between landowners and utilities.
With Bitcoin hash prices hitting record lows, efficiency becomes paramount. Recent reports indicated that hashprice dropped to $27.89 per PH/s per day, forcing miners using older technology to operate at a loss. It amplifies the need for newer hardware operating on cost-efficient energy sources in regions like Paraguay and Laos where competitive advantages remain in place.
Furthermore, U.S. mining operations are faced with bureaucratic hurdles. The Federal Energy Regulatory Commission (FERC) now mandates that regional grid operators justify their interconnection rules for new projects, adding complexity to the already lengthy process of establishing new sites. These developments cultivate an environment that makes U.S. operations less appealing compared to countries with more favorable conditions.
Regulatory guidelines continue to evolve, with certain protocols being deemed non-securities by the SEC. Nevertheless, the fact remains that many barriers stand firm between the U.S. validation sector and being a truly competitive player in the global landscape. These include custody regulations, securities classifications, and licensing requirements that could stall growth domestically.
As discussions around H.R. 9175 heat up, the timeline for its potential passage becomes critical, especially with departures of key advocates in the Senate. For Bitcoin mining to thrive domestically under the “Bitcoin made in America” narrative, lawmakers might need to examine more than just taxation. Infrastructure, including power supply and permitting efficiency, holds the key to future expansion.
Trump’s vision faced a hard reality as operators are forced to deploy capacity in regions where operational conditions outweigh those offered in the U.S. Whether regulatory reforms can catch up with infrastructural needs remains to be seen. However, as the competitive landscape evolves with tech advancements and changes in global policy, the U.S. might find its footing again in the ever-changing narrative of Bitcoin mining.
The proposed act aims to allow miners to defer taxes on newly minted tokens until they are sold, which can alleviate cash-flow pressures and promote onshore operations.
Miners face challenges such as high power costs, long permitting timelines, land availability, and grid reliability which drive many to seek operational bases abroad.
As other countries streamline regulations and offer better logistics, U.S. Bitcoin mining could lose competitiveness, emphasizing the need for domestic infrastructure improvements and favorable regulatory frameworks.