The International Monetary Fund (IMF) has suggested a significant tax increase on crypto mining activities to tackle global carbon emissions.
Shafik Hebous, the IMF Fiscal Affairs Department’s deputy division chief, and climate policy division economist Nate Vernon-Lin have proposed that raising the average electricity costs for crypto miners by 85% through taxes could substantially reduce emissions.Â
The IMF officials argue that this tax, set at $0.047 per kilowatt hour, could align the crypto mining industry’s emissions with global environmental goals.
Implementing this tax could increase the average electricity price for crypto miners by 85%, potentially raising $5.2 billion in annual global government revenue. Hebous and Vernon-Lin further claim that the tax could cut emissions by 100 million tons annually, an amount equivalent to Belgium’s yearly carbon output.
Additionally, a higher tax of $0.089 per kilowatt hour, accounting for miners’ local health impacts, could be considered.
The IMF also suggests a similar approach for AI data centers, proposing a tax of $0.032 per kilowatt hour, which could rise to $0.052 when considering pollution costs. This tax on AI energy use could generate $18 billion yearly, adding to the environmental benefits.
Despite the potential benefits, the IMF acknowledges the need for global coordination to prevent crypto miners from relocating to jurisdictions with lower tax standards.
The proposal also addresses concerns about the relative impact of crypto mining on global emissions. For instance, Amazon’s carbon footprint in 2021 was reportedly 71.54 million metric tons, surpassing Bitcoin’s estimated 65.4 million metric tons.
The IMF’s proposed tax aims to encourage the use of energy-efficient equipment and less energy-intensive operations, though global cooperation is essential for effective implementation.
The IMF’s proposal to tax crypto mining and AI data centers could serve as a significant step toward reducing global carbon emissions. However, its success depends on international collaboration and the adoption of more sustainable practices within the industry.
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