The International Monetary Fund (IMF) said on Thursday that increasing electricity taxes on crypto miners by up to 85% could go a long way in curbing global carbon emissions, as the institution continues to issue warnings about the cryptocurrency industry.
This comes despite the fact that small-scale miners have struggled to turn a profit since bitcoin's halving in April, putting miners under increasing pressure to find more efficient ways to operate.
“Such a tax would increase annual government revenues worldwide by $5.2 billion and reduce annual emissions by roughly 100 million tonnes of Belgium's current emissions,” the IMF wrote in a blog post.
It is unclear whether such a tax increase would directly reduce emissions, as mining companies often seek cheaper alternatives in countries where electricity prices are more favorable.
For artificial intelligence data centers, the IMF said the targeted tax on electricity usage should be set at $0.032 per kilowatt-hour, or $0.052 including air pollution costs.
“Slightly lower than cryptocurrencies as data centers tend to be located in locations with greener power. This could potentially raise as much as $18 billion per year,” the company said.
The environmental impact of crypto mining and artificial intelligence data centers is currently estimated to account for 2% of global electricity consumption and roughly 1% of global carbon dioxide emissions, according to the IMF.
This follows a recent IMF report in September which highlighted the power usage of both industries, stating that cryptocurrency mining and AI data centers are expected to consume as much energy as Japan, the world's fifth-largest electricity consumer, within the next three years.
The IMF estimates that cryptocurrency mining alone could account for 0.7% of global carbon dioxide emissions by 2027.
The IMF said that a direct tax of $0.047 per kilowatt-hour on electricity used by crypto miners could significantly reduce emissions and align the industry with global climate goals.
Taking into account the wider health effects of air pollution, the tax increase could rise to $0.089 per kilowatt-hour, meaning miners' electricity bills would increase by 85%.
The IMF said such measures could generate $5.2 billion in annual revenue while reducing emissions by about 100 million tonnes, roughly equivalent to Belgium's current emissions.
The IMF acknowledged that the tax hike was needed as part of a global push to regulate and end the offshoring of coal miners and jurisdictional arbitration that could undermine those efforts.
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