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Two managers at the International Monetary Fund (IMF) have suggested that raising the price of electricity used for crypto mining by 85% through taxes could significantly reduce carbon emissions.
IMF Suggests Price Raise For Crypto Mining Energy
A tax of $0.047 per kilowatt-hour could bring the crypto mining industry in line with global climate goals, IMF Deputy Director of Finance Shafik Hebous and Climate Policy Department Economist Nate Vernon-Lin said in a statement on August 15. Given the impact of miners on local health, the tax could go as high as $0.089, they said.
Hebous and Vernon-Lin claimed that this higher tax would increase the average electricity price for crypto miners by 85%, add $5.2 billion to annual global government revenues, and reduce annual emissions by 100 million tons, equivalent to the total emissions of Belgium.
They noted that a Bitcoin transaction uses as much electricity as an average Pakistani in three years, while the AI model ChatGPT requires 10 times more energy than a Google search.
IMF Notes Climate Goals
IMF officials also suggested a tax on AI data centers’ energy use of $0.032 per kilowatt-hour. This tax could rise to $0.052 when pollution costs are taken into account. This could generate $18 billion in annual revenue for governments.
An IMF report published in September suggested that crypto mining could account for 0.7% of global carbon emissions by 2027. If emissions from AI data centers are included, that figure could rise to 1.2%, totaling 450 million tons of emissions.
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Hebous and Vernon-Lin noted that this targeted tax could encourage crypto miners and AI data centers to use more energy-efficient equipment and encourage crypto miners to adopt less energy-intensive operations.
However, they said the tax should be coordinated globally, or it could be tempting to move from stricter measures to lower-standard areas.
There is ongoing debate about how much emissions crypto miners produce relative to other industries. For example, tech giant Amazon had a reported carbon footprint of 71.54 million metric tons in 2021, more than Bitcoin’s estimated 65.4 million metric tons.
Some countries have banned crypto mining because it puts too much strain on their power grids. For example, Venezuela banned crypto mining and Iran started offering $24 bounties for tipping off illegal crypto miners.
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