Two International Monetary Fund (IMF) executives have stated that increasing the average global cost of Crypto Mining electricity to 85% could reduce carbon emissions.
The IMF Fiscal Affairs Department’s deputy division chief Shafik Hebous and climate policy division economist Nate Vernon-Lin wrote on Aug. 15 that a tax of $0.047 per kilowatt hour “would encourage the crypto mining industry to reduce its emissions following global objectives.” A tax on the energy consumed by crypto processors has the potential to reduce emissions by 100 million tons annually, which is equivalent to Belgium’s emissions.
The tax would increase to $0.089 per kilowatt hour if the local impact of miners on health were considered, according to the pair.
Hebous and Vernon-Lin stated that the increased tax would result in an 85% increase in the average electricity price for crypto processors, a $5.2 billion increase in global government revenue, and a reduction of 100 million tons of emissions annually, equivalent to Belgium’s emissions.
They asserted that a single Bitcoin transaction consumes approximately the same electricity as the average person in Pakistan consumes in three years. In contrast, the artificial intelligence model ChatGPT requires ten times the amount of power compared to a Google search.
The IMF officials also proposed an AI data center energy use tax of $0.032 per kilowatt hour, which increases to $0.052 when pollution costs are considered, as these centers are “more likely to be located in areas with cleaner electricity.” Governments could potentially generate $18 billion annually from this levy.
According to a September IMF paper, crypto mining could be responsible for 0.7% of global carbon emissions by 2027. The cumulative emissions from AI data centers could reach 1.2%, which equates to 450 million tons of emissions.
Execs Say tax could push crypto mining and Miners
Vernon and Hebous-Lin stated that the targeted tax could potentially motivate crypto miners and AI data centers to implement more energy-efficient equipment and result in crypto miners transitioning to less energy-intensive operations.
Nevertheless, they stated that global coordination was necessary for the tax, as “relocation to jurisdictions with lower standards may be encouraged by stricter measures in one location.”
Nevertheless, there have been disputes regarding the extent to which crypto miners generate emissions compared to other industries. Amazon, a technology behemoth, reported a carbon footprint of 71.54 million metric tons in 2021, already greater than the estimated 65.4 million metric tons of carbon dioxide emitted by Bitcoin.
Crypto mining has been prohibited in certain countries, including Venezuela, due to its strain on the electricity grid. Iran has also initiated a $24 reward for individuals who report illicit crypto miners, as the nation’s grid is experiencing strain due to a severe heatwave.
