City of Detroit makes history with contentious new tax program: 'We're excited to hear from entrepreneurs'

The city of Detroit is starting a new program to provide residents with a unique way to pay their taxes.

What's happening?

According to American City and County, Detroit is in the process of becoming the largest city in the country to accept cryptocurrency to pay taxes and other fees.

The secure platform will run through PayPal, and city officials hope it will allow them to explore how blockchain will increase government transparency.

"Detroit is building a technology-friendly environment that empowers residents and entrepreneurs," Detroit Mayor Mike Duggan said in a statement. "We are excited to be one of the first major U.S. cities to explore blockchains civic applications and allow residents to use their cryptocurrency as a payment option."

"Blockchain technologies have the potential to drive greater accessibility, efficiency, transparency, and security and we're excited to hear from entrepreneurs at the forefront of this work," said Justin Onwenu, director of entrepreneurship and economic opportunity.

Why is cryptocurrency contentious?

Cryptocurrency continues to grow in popularity, especially in the United States, but the digital currency is not without controversy. Mining bitcoin (which is the most popular form of crypto) involves using hundreds of computers and servers to solve complex equations, and it thus requires immense amounts of computing power and energy.

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While many in the industry have been working to move more toward renewable energy, many crypto mining operations and private miners rely on dirty energy from the grid or from dedicated dirty energy plants, and reports indicate that it has a profound environmental impact. The currency has also been frequently linked to illicit activities, and reports have found mining for it booming in geopolitically grey areas where energy usage isn't subject to regulation.

On top of that, crypto mining has been crashing power grids in several places around the world, drawing power from homes and other businesses due to its massive energy demands, leading some countries or regions to outlaw or suspend the practice.

However, accepting it as a form of payment encourages tech companies to invest in Detroit's future and could further spur economic growth in a city that has been on the rise economically in recent years.

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What's being done about crypto mining?

People and countries are pushing back against unregulated crypto mining. The European nation of Georgia has warned citizens about the practice, noting that it threatens power grids. The U.S. federal government is also looking into the energy usage of crypto mining and figures to start regulating the practice in the near future.

The industry is also trying to lessen its environmental impact, as mining operations move more toward renewable energy and startups look for ways to use less power in their computing.

The industry will continue to grow, and as more governments legitimize it as a currency, more regulations are likely to be put in place to ensure the energy usage and security continue to head in the right direction.