Trump’s Bitcoin made in America push runs into a power problem the tax bill cannot fix

A notable development has hit the crypto markets. Congress is moving to fix how the US tax code treats crypto mining and staking rewards, and for validators and their institutional clients, the fix is long overdue. 9175, the Tax Clarity for Mining and Staking Act, would let miners and stakers defer tax on newly minted tokens until they sell them, ending a cash-flow penalty that has pushed validation infrastructure and its largest clients toward offshore jurisdictions with clearer rules. For Bitcoin miners, the bill barely touches the actual competition consisting of land availability, power contracts, permitting timelines, and grid reliability, which determine where the next megawatt gets built.

The staking tax problem Under IRS Revenue Ruling 2023-14, validators and their clients owe ordinary income tax on staking rewards the moment they are received, at that day's price, whether or not they have sold a single token. In staking-as-a-service models, where institutional clients delegate tokens to a validator while those tokens are locked during a bonding period, the client owes a cash tax bill on assets they cannot yet liquidate. The infrastructure provider owes tax on the commission it collected from those same illiquid tokens.

Market Dynamics

Jennie Levin, chief legal and operating officer at the Algorand Foundation and a former staking-as-a-service operator, calls this “a constant cash drag” where every reward on every network must be valued at the moment of receipt. If the price falls before anyone can sell, the liability is already set at the higher number. That position hardened on June 4, when the US Tax Court issued its first opinion directly addressing the taxation of staking rewards.

In 2026-46, the court held that rewards constitute gross income under Section 61 when the taxpayer gains dominion and control over them. The ruling is non-precedential, and Jarrett v. United States and other pending cases may yet complicate it, but it arrived exactly when Congress is deciding whether to legislate a different answer.

9175 gives taxpayers the option to treat newly minted tokens as self-created property, deferring recognition until disposition. The Blockchain Association, Crypto Council for Innovation, and The Digital Chamber have backed it as a “balanced compromise” that preserves ordinary-income classification while eliminating the tax-before-liquidity penalty that drives staking infrastructure offshore. If it passes, institutional clients can build US-based validation businesses without treating every reward cycle as a potential cash-flow crisis, a change that becomes most valuable when prices are rising, and phantom tax obligations on locked tokens are at their largest.

Market Impact

A five-step diagram contrasts current IRS treatment of staking rewards as taxable upon receipt with H. 9175's proposed deferral of tax recognition until tokens are sold or disposed of. Switzerland and Singapore have already moved to offer clearer treatment, and they are pulling institutional staking business at the margin as a result.

Levin noted where the bill's reach ends: “The tax bill takes the US from punitive to viable; securities and custody clarity is what makes it competitive. ” The SEC's Division of Corporation Finance issued a May 2025 statement noting that certain protocol staking activities do not involve securities offerings, and the agency rescinded SAB 121 in January 2025, which had required firms that custody digital assets to account for them as liabilities on their own balance sheets. Both moves reduced friction, and both remain staff-level guidance that a future Commission can reverse without rulemaking, leaving securities classification, custody rules, and licensing as the barriers between a viable US validation sector and one that is genuinely competitive.

Bitcoin mining follows infrastructure President Donald Trump's campaign pledge of “Bitcoin made in America” ran into reality: the executives deploying capacity build where power is cheap, land is permitted, and grid contracts hold for a decade. The US held roughly 37. 5% of global Bitcoin hashrate as of January 2026, the largest national share, while Paraguay grew 54% year-over-year to reach 4.

Crypto markets are watching this development closely as investors weigh its potential impact on prices.