The IMF is about to issue a hefty new electricity bill on cryptocurrency miners, suggests the latest crypto news.
Two executives from the International Monetary Fund (IMF) suggest that hiking the average electricity costs for crypto mining by as much as 85% through targeted taxes could significantly reduce carbon emissions.
Shafik Hebous, the IMF Fiscal Affairs Department’s deputy division chief, and Nate Vernon-Lin, a climate policy division economist, proposed on August 15 that a tax of $0.047 per kilowatt hour could push the crypto mining industry to cut emissions in line with global climate goals.
By accounting for the local health consequences of mining, the tax would climb to $0.089 per kilowatt hour. This would impose a hefty 85% increase on electricity costs for crypto miners, generating a substantial $5.2 billion in additional annual revenue for governments and drastically curbing emissions by 100 million tons per year—the equivalent of Belgium’s total emissions.
Hebous and Vernon-Lin highlighted the immense energy consumption of crypto mining, stating that a single Bitcoin transaction uses as much electricity as the average person in Pakistan consumes in three years. They also noted that the artificial intelligence model ChatGPT requires ten times the energy of a typical Google search.
Moreover, the researchers also suggested a tax of $0.032 per kilowatt hour on energy consumed by AI data centers, rising to $0.052 when pollution costs are factored in. Given the often green energy sources used by these centers, this tax could yield an extra $18 billion annually for governments.
The IMF predicts that cryptocurrency mining alone will contribute 0.7% of global carbon emissions by 2027. Including AI data centers, this figure jumps to 1.2%, equaling 450 million tons of emissions.
Hebous and Vernon-Lin believe such a tax could encourage both crypto miners and AI data centers to invest in greener technologies and practices. Yet, they warn that international cooperation is crucial, as stricter regulations in one place might simply drive businesses to less restrictive regions.
Despite these proposals, there is ongoing debate about the relative carbon emissions of crypto mining compared to other sectors. For instance, Amazon’s carbon footprint in 2021 alone was 71.54 million metric tons of CO2, surpassing Bitcoin’s estimated 65.4 million metric tons.
Additionally, some countries, like Venezuela, have banned crypto mining due to the strain it places on power grids. Iran has even introduced a $24 reward for reporting illegal crypto miners, as the country’s grid faces severe pressure amid an intense heatwave.
