REGULATION | Increasing Electricity Tax for Crypto Miners By 85% Could Curb Global Carbon Emissions Says IMF

Such measures could generate $5.2 billion in annual revenue while reducing emissions by approximately 100 million tons, roughly equivalent to Belgium's current emissions, the IMF said.

kodzilla··2 min read

According to the International Monetary Fund (IMF), an increase in electricity taxes for crypto miners by as much as 85% could play a significant role in curbing global carbon emissions.

 

“Such a levy would raise annual government revenue of $5.2 billion globally and reduce annual emissions by 100 million tons around Belgium’s current emissions,” said the IMF.

 

For artificial intelligence data centers, a targeted tax on their electricity use would need to be set at $0.032 per kilowatt hour, or $0.052, including air pollution costs, the IMF said.

 

“It is slightly lower than for crypto because data centers tend to be in locations with greener electricity. This could raise as much as $18 billion annually,” it said.

 

Moreover, it is estimated the environmental impact of both crypto mining and artificial intelligence data centers together now account for 2% of global electricity consumption and nearly 1% of global carbon emissions.

The IMF, which has recommended for crypto regulation in countries like Nigeria, estimates that crypto mining alone could contribute 0.7% of global carbon dioxide emissions by 2027.

A direct tax of $0.047 per kilowatt hour on electricity used by crypto miners could significantly reduce emissions, aligning the industry with global climate goals, the organization said.

The tax hike could increase to $0.089 per kilowatt hour when accounting for the broader health impacts of air pollution, representing an 85% increase in electricity costs for miners.

Such measures could generate $5.2 billion in annual revenue while reducing emissions by approximately 100 million tons, roughly equivalent to Belgium’s current emissions, the IMF said.

But as it is, many data centers and crypto miners enjoy generous tax exemptions and incentives on income, consumption, and property, the IMF said.

 

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“Considering the environmental damage, the lack of significant employment, and pressures on the electrical grid (possibly raising prices for households and reducing demand for the use of other low emissions goods, such as electric vehicles), the net benefits of these special tax regimes are unclear at best.”

 

 

 

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