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16/08/24
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IMF Proposes Tax on Crypto Mining to Combat Carbon Emissions
Executives from the International Monetary Fund (IMF) have suggested that implementing a new tax on electricity used for crypto mining could significantly reduce carbon emissions globally. They propose an increase in electricity costs for crypto operations by up to 85% through a tax of $0.047 per kilowatt hour. This measure is aimed at aligning the crypto mining industry with global sustainability targets.
If the tax also considers the local health impacts of mining activities, the proposed rate would rise to $0.089 per kilowatt hour. The IMF representatives estimate that this increased tax could elevate global electricity costs for crypto miners, generate an additional $5.2 billion in government revenues annually, and reduce carbon emissions by 100 million tons each year—a figure comparable to the emissions of Belgium.
The report indicates that a single Bitcoin transaction consumes an amount of electricity equivalent to what an average individual in Pakistan would use over three years. Additionally, it highlights that energy use associated with modern AI tools like ChatGPT is significantly greater than that of traditional online searches. The IMF also suggested introducing a tax for energy consumption in AI data centers, starting at $0.032 per kilowatt hour, which could provide governments with around $18 billion per year when considering pollution costs.
The IMF anticipates that by imposing such taxes, both crypto miners and AI data centers may be incentivized to adopt more energy-efficient technologies and practices. However, the organization emphasized the need for a coordinated global approach to avoid the risk of miners relocating to regions with less stringent regulations.
Debates continue regarding the carbon footprint of crypto mining compared to other industries. For instance, tech giant Amazon recorded a carbon footprint of 71.54 million metric tons in 2021, surpassing the estimated emissions from Bitcoin mining, which stood at approximately 65.4 million metric tons. Certain countries, like Venezuela, have already taken measures, such as banning crypto mining, to alleviate excessive strain on their power grids, particularly during periods of extreme demand.
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