Will Congress Kill the ‘Phantom Tax’ on Crypto Mining and Staking? Inside H.R. 9175 and What It Means for Your Wallet

A major battle is heating up in Congress that could reshape how cryptocurrency mining and staking are taxed, potentially saving retail investors from the dreaded “phantom tax.” On June 21, 2026, a coalition of major digital asset advocacy groups urged the House Ways and Means Committee to pass H.R. 9175, the Tax Clarity for Mining and Staking Act, which would allow investors to defer tax payments on new tokens until they are actually sold.

By Michael Nguyen | June 27, 2026

For the average cryptocurrency investor, earning rewards through staking or mining is a popular way to build a portfolio. Staking is a lot like earning interest on a bank savings account. By locking up your digital assets to help secure a blockchain network, you receive newly minted tokens in return. However, under current Internal Revenue Service (IRS) guidelines, these rewards are taxed the very second they enter your digital wallet. This policy creates what the industry calls “phantom income”—you are forced to pay taxes on money you have not actually cashed out yet.

This tax structure can cause severe financial pain during market downturns. For instance, if you earn rewards in Ethereum (ETH) or Solana (SOL) when prices are high, but the market drops before you sell, you could end up owing more in taxes to the government than the tokens are actually worth. Currently, Bitcoin (BTC) is trading at $60,318, Ethereum (ETH) is at $1,583.13, and Solana (SOL) is trading at $71.9. Under the current tax regime, any rewards earned at these price levels must be reported as immediate income. However, the newly proposed bill, H.R. 9175—introduced by Representative Mike Carey (R-OH) on June 8, 2026—aims to fix this by allowing taxpayers to defer tax recognition until the assets are actually sold or exchanged.

The Hardware/Software Landscape

To understand the pressure facing the network, we must first look at the specialized computers and programs that run it. Bitcoin mining requires application-specific integrated circuit (ASIC) machines. These are high-powered, single-purpose computers designed solely to solve the complex mathematical puzzles required to secure the blockchain. Right now, the hardware landscape is dominated by cutting-edge models that prioritize extreme energy efficiency to keep costs down.

Leading the pack is the Bitmain Antminer S23 Hyd 3U, a hydro-cooled powerhouse launched in early 2026. This machine offers a massive hashrate of 1.16 PH/s (petahashes per second, which measures how many trillions of guesses the computer can make every second) while maintaining a highly efficient power consumption of 9.5 J/TH (Joules per Terahash). Other major players dominating industrial fleets include the hydro-cooled Bitdeer Sealminer A2/A3 series and the Bitmain S21 XP series. In the current economic climate, any hardware running with an efficiency rating above 22 J/TH is generally considered obsolete and unprofitable unless the operator has access to free electricity.

On the software side, operators rely on management programs to coordinate their machines. Large-scale mining farms typically use platforms like Awesome Miner and HiveOS to monitor hardware temperatures, track earnings, and automatically switch to the most profitable pools. For advanced users who require manual, line-by-line control over their setups, command-line interfaces like CGMiner and BFGMiner remain the industry standard. Meanwhile, smaller hobbyists tend to favor beginner-friendly software like EasyMiner or MultiMiner, or opt for NiceHash, a service that allows users to sell their computing power to others in exchange for regular payouts.

Hashrate & Difficulty

The total computing power of the Bitcoin network, known as the hashrate, has experienced a steady decline in recent months. Think of the hashrate as the total number of workers digging in a virtual gold mine. Since peaking in October 2025, the total network hashrate has dropped by approximately 23%, with the average hashrate currently hovering between 960 EH/s and 970 EH/s (exahashes per second). During the mid-month market volatility, this figure even dipped as low as 886 EH/s as less efficient mining operations turned off their machines.

To keep block production steady at roughly one block every ten minutes, the Bitcoin protocol automatically adjusts its difficulty. When miners leave the network, the difficulty drops; when more miners join, the difficulty rises. On June 14, 2026, the network executed a massive 10.09% downward difficulty adjustment, dropping from 138.96 trillion to 124.93 trillion (often abbreviated as 124.93 T). This difficulty drop acted as a crucial lifeline, making it significantly easier and cheaper for the remaining miners to earn Bitcoin. However, the relief may be short-lived. A new difficulty adjustment scheduled for June 27, 2026, is projected to increase the difficulty by approximately 7%, potentially pushing it back to around 134 T.

Profitability Metrics

Mining profitability has been severely squeezed throughout the first half of 2026. The main culprit is the gap between what it costs to mine a Bitcoin and the actual market price of the asset. Analysts at investment bank JPMorgan estimate that the average all-in production cost to mine a single Bitcoin stands at approximately $78,000. With the current market price of Bitcoin trading at $60,318, the spot price has remained significantly below this break-even threshold for five consecutive months.

This prolonged squeeze has pushed a significant portion of the industry to the brink of survival. Analysts estimate that approximately 20% of miners are currently operating at a loss. To keep their doors open, many public mining companies have been forced to sell off large portions of their accumulated Bitcoin reserves. To stay profitable in this environment, operations must meet two strict criteria:

• Ultra-cheap power — Miners typically require all-in electricity rates of $0.06 per kilowatt-hour (kWh) or lower. Any rate above $0.09/kWh is generally uneconomical.
• Next-generation hardware — Operations must use S21-class machines or better, which operate at a high efficiency of 13 J/TH to 16 J/TH.

Environmental Impact

As the industry consolidates, the environmental debate surrounding cryptocurrency mining has evolved. Rather than focusing solely on total electricity usage, observers are looking at the type of energy being consumed. According to data from mid-2026, approximately 56.7% of the Bitcoin network’s energy mix now comes from sustainable sources, including wind, solar, hydro-electric, and nuclear power. In many regions, natural gas has also surpassed coal as the primary fossil fuel used to power operations.

The network’s annual electricity consumption is currently estimated to be between 138 TWh and 165 TWh. This accounts for roughly 0.5% of all global electricity consumption. While this is a substantial amount of energy, the industry is increasingly positioning itself as a tool for grid stabilization. By co-locating mining centers directly next to renewable energy plants, miners act as a “demand response” tool. They buy up excess electricity that the local grid cannot handle during times of overproduction, helping green energy projects remain financially viable.

Nonetheless, regulatory pressure is mounting. Governments are demanding detailed environmental disclosures. In Europe, regulators have introduced strict carbon reporting mandates under various national frameworks. Similarly, multiple state governments in the United States are introducing disclosure laws to monitor the impact of large data centers on local power grids and electronic waste production.

Strategic Outlook

The strategic direction of the mining and staking industries hinges on both technological pivots and legislative battles. If passed, H.R. 9175 would solve the liquidity issues caused by the “phantom tax.” On June 21, 2026, a powerful coalition of advocacy groups, including the Blockchain Association, the Crypto Council for Innovation, and The Digital Chamber, sent a joint letter to the House Ways and Means Committee urging them to pass the bill without amendments. However, the bill faces key hurdles, including a proposal by Representative Steven Horsford to place a five-year limit on the tax deferral—an amendment the crypto coalition has labeled a “dealbreaker.” Furthermore, the American Bankers Association (ABA) has strongly opposed the bill, arguing it gives crypto an unfair tax advantage over traditional savings accounts.

To survive the immediate profit squeeze, many public mining companies are diversifying. Instead of dedicating all their power to mining Bitcoin, companies are converting their high-performance data centers to host workloads for Artificial Intelligence (AI) and high-performance computing (HPC). This shift provides miners with stable, contract-based cash flow that does not depend on volatile coin prices.

For retail investors, this transition and the potential passage of the Tax Clarity for Mining and Staking Act are critical developments. If H.R. 9175 becomes law, staking assets like Ethereum (ETH) and Solana (SOL) will become far more tax-efficient, allowing you to compound your rewards without worrying about immediate tax liabilities. In the meantime, the mining sector’s pivot to AI could make publicly traded mining stocks a more resilient addition to a traditional investment portfolio.

Disclaimer

The cryptocurrency market remains highly volatile. This article is for informational purposes only and does not constitute financial advice.