Crypto traders raked in significant gains over last week, with <a href="https://www.coingecko.com/en/coins/bitcoin" target="_blank" rel="nofollow noopener">Bitcoin</a> breaching its $40,000 resistance while climbing up to nearly $43,000 yesterday. Meanwhile, Ethereum also managed to conquer its predicted high of $2,500 as bulls showed resilience against short-sellers. Altogether, the total crypto market capitalization added $250 billion to its value from these price rallies and is expected to touch $1.7 trillion soon. 

While all these figures paint a bright picture, the underlying reality is that digital asset investors are increasingly worried due to the crypto tax provisions added in the $550 billion bipartisan infrastructure bill — cited by some as a threat to the booming industry’s growth.
<h2>Crypto Traders Fearful of New Tax Law Proposed in Bipartisan Bill</h2>
The highly debated crypto tax rules proposed in the legislation use an extremely loose definition of the term broker, that could impel exchanges and wallets to gather more information on their customers in the future. Additionally, miners, validators, and even liquidity providers would have to report their crypto dealings to the Internal Revenue Service (IRS), if the term is taken literally.

Some of these activities are impossible to report, as suggested by Jake Chervinsky, the general counsel for DeFi lending protocol Compound. In a tweetstorm published last week, Chervinsky said that non-custodial entities like miners would find it difficult to provide the information needed in IRS form 1099. This could lead to a de-facto ban on crypto mining in the US.

“This is a deeply misguided provision that, if adopted, will do far more harm than good to US interests…We can't make the same mistake China did. We have to stay in the game,” he said.

However, Chervinsky pointed out that there’s still scope for amendments in the bill, as it hasn’t been finalized yet. Even if it is passed in its existing state, the bill would take effect two years to come into effect. Crypto lobbyists and supporters are hoping to use this time to contest the law in courts and the legislature.
<h2>China’s Mining Crackdown and Miners’ Pivot to the US </h2>
Ever since <a href="https://www.cryptoknowmics.com/news/china-crypto-roundup-mining-bans-provoke-migrations-and-alipays-nfts/">China cracked down on cryptocurrencies</a> and their mining, miners from the country have looked towards the US for re-establishing their businesses. Texas, Miami, Wyoming, and several other states have attracted Bitcoin miners with offers of cheap electricity and tax breaks. Additionally, the country’s own domestic mining firms have announced plans of expansion, with a heavy focus on <a href="https://www.cryptoknowmics.com/news/greenidge-generation-bitcoin-mining-to-go-carbon-neutral-next-month/">renewable energy</a> and compliance with local regulations.

According to recent Cambridge University data, the United States has now become the world’s second-largest crypto mining hub, accounting for around 17% of all Bitcoin mining. Meanwhile, China’s contribution to <a href="https://www.cryptoknowmics.com/news/bitcoin-hashrate-dominance-of-china-dives-north-america-may-be-the-next-potential-candidate/">BTC hash rates</a> has declined to almost 45%, a figure that will decrease further with time. 

Although crypto supporters in the US are optimistic about the recent developments, lawmakers are largely dismissive of them. They argue that mining accelerates climate change due to its massive carbon footprint, and cryptocurrencies facilitate tax evasion and money laundering.

Crypto Traders Express Fear Even as Bitcoin Soars Above $40,000

Fear among crypto traders is increasing amid the new crypto tax provisions added to the $550 billion infrastructure deal partially approved by the Senate.

Divya is a postgraduate from Jawaharlal Nehru University specializing in International Relations and a professional writer with more than 5 years of experience writing for the web. She is an avid reader interested in the global financial system and the effects of decentralization. At Cryptoknowmics, she hopes to deliver clear and understandable content to inform readers about the latest events in the crypto sector.

Crypto Traders Express Fear Even as Bitcoin Soars Above $40,000

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