The International Monetary Fund (IMF) recently proposed a steep rise in electricity taxes for cryptocurrency miners as a possible solution to stem global carbon emissions. Highlighting the environmental impact of the activity, the IMF suggested that an increase of as much as 85% could help streamline the industry’s operations and add billions to government revenues, even as minor mining factions grapple with efficiency issues post Bitcoin’s halving event. The suggested tax could reportedly generate around $5.2 billion per year in global government revenue and potentially reduce annual emissions by 100 million tons.
The IMF also advocates for augmented electricity taxes on artificial intelligence data centers. The proposed amount for this hike is $0.032 to $0.052 per kilowatt hour, accounting also for air pollution costs. Such a measure could generate approximately $18 billion in annual revenue. The specifics of electricity usage show that crypto-mining and AI data centers together account for approximately 2% of global electricity consumption and nearly 1% of global carbon emissions.
In a recent report, the IMF revealed that the energy consumed by crypto mining and AI data centers could match that of Japan, the world’s fifth-largest electricity consumer, within the next three years. The organization further estimates that the mining operations of cryptocurrencies alone are set to result in 0.7% of global carbon dioxide emissions by 2027.
A practical taxing approach, as per the IMF, would involve a direct tax of $0.047 per kilowatt hour on electricity consumption by crypto miners. However, accounting for the wider impact of air pollution, this could rise to $0.089 per kilowatt hour, signifying an 85% increase in electricity costs for miners. However, the IMF acknowledges that successful implementation of a tax hike would necessitate a globally coordinated effort to prevent miners from shifting operations to jurisdictions with cheaper electricity.