Key Takeaways:
- IMF proposes an 85% electricity tax hike on crypto miners to reduce global carbon emissions.
- The tax could generate $5.2 billion annually but may push miners to relocate to cheaper regions.
- Smaller crypto mining operations face increased pressure following Bitcoin’s halving event and the proposed tax.
YEREVAN (CoinChapter.com) — On Thursday, the International Monetary Fund (IMF) called for an 85% increase in electricity taxes for crypto miners. The IMF believes this tax could help reduce global carbon emissions while generating significant government revenue. The proposal follows concerns about the environmental impact of the cryptocurrency industry, especially after Bitcoin’s halving in April, which has already affected smaller mining operations.
IMF Warns of Crypto Miners Relocating Amid Proposed Tax Hike
The IMF suggests that increasing electricity taxes on crypto miners could generate $5.2 billion annually for governments worldwide. The organization also projects that this move could reduce carbon emissions by 100 million tons each year, which is roughly equivalent to Belgium’s current emissions. However, the IMF acknowledges the challenge that miners might relocate to countries with cheaper electricity, which could undermine these efforts.
The proposal comes as smaller crypto mining operations struggle with profitability after Bitcoin’s recent halving event. The suggested tax increase may add pressure on these operations, potentially forcing them to seek more affordable energy sources or move to regions with lower costs.
IMF Suggests Tax on AI Data Centers to Tackle Energy Consumption and Emissions
The IMF also proposes a tax on electricity usage for artificial intelligence (AI) data centers. The suggested rate is $0.032 per kilowatt hour, or $0.052 when including air pollution costs. This rate is lower than the proposed tax for crypto miners because AI data centers tend to use greener electricity. The IMF estimates this tax could raise $18 billion annually.
The IMF estimates that the combined energy consumption of crypto mining and AI data centers now accounts for 2% of global electricity use and nearly 1% of carbon emissions. As energy consumption in these industries continues to grow, the IMF’s proposal seeks to address their environmental impact.
IMF Calls for Global Tax on Crypto Mining to Cut Emissions
The IMF emphasizes that a global effort is necessary to implement this tax hike effectively. Without coordination, crypto miners might move their operations to countries with lower electricity costs, which could reduce the effectiveness of the tax.
A recent IMF report indicated that crypto mining could contribute 0.7% of global carbon dioxide emissions by 2027. To align the industry with global climate goals, the IMF suggests a direct tax of $0.047 per kilowatt hour on electricity used by crypto miners. This tax could increase to $0.089 per kilowatt hour, reflecting an 85% rise in electricity costs for miners.
IMF Urges Tax Hikes on Crypto Mining and AI to Combat Rising Energy Use
The IMF’s proposal comes after a September report highlighted the growing electricity consumption of crypto mining and AI data centers. The report warned that these industries could consume as much energy as Japan within the next three years.
The IMF’s proposal focuses on addressing the environmental impact of these industries while generating revenue for governments. However, the success of these measures depends on global cooperation and the response of the affected industries.
