IMF Proposes 85% Tax Increase on Crypto Mining to Cut Emissions
On Thursday, IMF officials proposed a substantial increase in taxes on electricity for cryptocurrency mining, suggesting an 85% rise could substantially cut global carbon emissions.
The recommendation comes amid challenges for smaller mining operations, intensified by Bitcoin’s halving event in April, which has strained miners to adopt more efficient methods. The IMF’s proposal aims to raise around $5.2 billion annually for governments while reducing global emissions by 100 million tons, roughly equivalent to Belgium’s total emissions.
IMF experts Shafik Hebous and Nate Vernon-Lin advocated for a tax rate of $0.047 per kilowatt hour for mining electricity, with an increase to $0.089 if health impacts are included. They compared the energy usage of a single Bitcoin transaction to the annual electricity consumption of an average Pakistani household and highlighted that AI models like ChatGPT consume significantly more power than a Google search.
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The IMF report highlights that both crypto mining and AI data centers together account for nearly 1% of global emissions and 2% of electricity use. The report predicts these sectors might match Japan’s energy consumption within three years.
While the proposed tax could drive significant reductions in emissions and generate substantial revenue, the IMF acknowledges that without global coordination, miners might relocate to countries with lower costs, potentially undermining the tax’s effectiveness. The proposal aims to encourage more energy-efficient practices within the industry.
The debate continues, with some arguing that major tech companies also have significant environmental impacts. Countries like Venezuela and Iran are already taking measures to limit crypto mining due to its impact on their power grids.
Alexander Stefanov
Reporter at CoinsPress
Alex is an experienced finance journalist and a cryptocurrency and blockchain enthusiast. With over five years of experience covering the industry, he deeply understands the complex and constantly evolving world of digital assets. His insightful and thought-provoking articles provide readers with a clear picture of the latest developments and trends in the market. His passionate approach allows him to break down complex ideas into accessible and insightful content. Follow up on his content to be up to date with the most important trends and topics - stay ahead of the curve with CoinsPress.
