Tax fix won’t solve US power, land limits for Bitcoin

Congress is considering H.R. 9175, the Tax Clarity for Mining and Staking Act, which would let taxpayers treat newly minted tokens as self-created property and delay income recognition until they sell or dispose of the tokens. Supporters say the change would address a cash-flow problem for validators and institutional clients who currently owe tax on rewards they cannot immediately liquidate.

Under IRS Revenue Ruling 2023-14, staking rewards are treated as ordinary income when received. The U.S. Tax Court issued an opinion in Paschall v. Commissioner, T.C. Memo. 2026-46, holding on June 4, 2026 that staking rewards count as gross income under Section 61 once a taxpayer gains dominion and control. That decision is non-precedential. Other cases, including Jarrett v. United States, remain pending.

Industry groups such as the Blockchain Association, the Crypto Council for Innovation and The Digital Chamber back H.R. 9175. They say the bill would remove the “tax-before-liquidity” issue that has led some institutional staking activity to move offshore. Jennie Levin, chief legal and operating officer at the Algorand Foundation and a former staking-as-a-service operator, described the current IRS treatment as “a constant cash drag” on staking operations.

Other legal questions remain unresolved. The SEC’s Division of Corporation Finance issued a staff statement in May 2025 saying certain protocol staking activities are not securities offerings, and the agency withdrew SAB 121 in January 2025, which had required custodians to record digital assets as liabilities. Both were staff-level actions and could be changed by future Commissions. Custody accounting, securities classification and licensing continue to be open issues for firms seeking to run validation businesses in the United States.

Site selection for Bitcoin mining is driven by land control, long-term power contracts, permitting timelines and grid reliability. The United States accounted for about 37.5% of global Bitcoin hashrate in January 2026. Paraguay grew about 54% year-over-year to reach 4.3% of global hashrate, Ethiopia reached roughly 2.5% and entered the global top ten, and Oman registered growth. CoinShares projects the Bitcoin network will reach about 1.8 ZH/s by the end of 2026.

Aydin Kilic, CEO of HIVE Digital Technologies, outlined the sequence for new builds as securing land and site execution, confirming off-taker demand, then locking long-term power. HIVE’s Yguazú campus in Paraguay obtained 300 MW of power agreements through established local land and utility relationships. A non-binding letter of intent for a Boden site in Sweden covers up to 25 MW of critical IT load and includes plans to retrofit the facility for GPU-based compute.

Market conditions have affected where operators place capacity. Hashprice fell to $27.89 per PH/s per day in the second quarter after Bitcoin dropped about 50% from its October 2025 peak near $124,000. Analysts estimate older-generation machines running at roughly $0.05 per kWh operate at negative gross margins. Operators with newer hardware and lower power costs in Paraguay, Laos and Finland sustained operations during the downturn.

Federal Energy Regulatory Commission directives requiring regional grid operators to review interconnection rules, and tighter oversight in ERCOT after reliability issues, have added time and cost to new U.S. projects. If enacted, H.R. 9175 would change tax timing for rewards but would not create additional power capacity, new interconnection points, faster permitting or more land available for large-scale mining projects.