- The IMF proposes electricity tax increases for crypto miners
- According to the agency, the levy would help miners reduce their carbon footprint.
International Monetary Fund (IMF) executives have proposed an 85% increase in electricity taxes Bitcoin [BTC] and crypto miners to effectively curb the carbon emissions associated with cryptocurrency mining.
The proposal was based on the climate impact of crypto miners and AI data centers. According to the IMF, crypto mining will cause 0.7% of CO2 emissions in 2027.
If data centers are included, this would represent 1.5% of global CO2 emissions in 2027.
“Cryptomining could generate 0.7 percent of global CO2 emissions by 2027. If the analysis is extended to data centers (based on IEA estimates), this means that their CO2 emissions could reach 450 million tonnes in 2027, or 1.2 percent of the world total.”
Will the tax increase solve crypto miners’ emissions?
The report added that mining a single BTC was equivalent to three years of electricity consumption by an average person in Ghana or Pakistan.
As of 2022, crypto mining and data centers accounted for 2% of global electricity consumption. According to the IMF report, this would rise to 3.5% by 2027, which is comparable to Japan’s electricity demand.
Source: IMF
To mitigate this, the agency has introduced a direct electricity tax of $0.047 per kilowatt hour to encourage miners to control their emissions. The IMF has proposed a further 85% increase for miners to tackle air pollution.
“If we also consider the impact of air pollution on local health, that tax rate would increase to $0.089, translating into an 85 percent increase in the average electricity price for miners.”
The agency also criticized current tax regimes with ‘generous tax exemptions’, stating that the benefits of current tax regimes for miners were unclear.
According to the IMF, the proposed levy increase would reduce annual CO2 emissions by 100 million tons, which corresponds to current Belgian emissions.
Russia recently warned that crypto mining could disrupt the country’s electricity supply. But the country has since done just that past a bill to enable controlled crypto mining.
Other countries such as China and Venezuela have a total ban on crypto mining. How other countries will adopt the proposals remains to be seen.