FameEX Hot Topics | IMF Executives Suggest Raising Electricity Prices for Crypto Mining by 85%

On August 15, Shafik Hebous, deputy division chief of the IMF’s Fiscal Affairs Department, and Nate Vernon-Lin, a climate policy economist, proposed a new tax targeting the crypto mining industry. They suggested a rate of $0.047 per kilowatt-hour, arguing that such a tax could help reduce the industry's emissions in line with global environmental goals. If the local health impacts of mining are considered, the proposed tax could increase to $0.089 per kilowatt-hour.

Hebous and Vernon-Lin estimated that this higher tax would raise the average electricity price for crypto miners by 85%, potentially generating $5.2 billion in annual global government revenue. Additionally, it could cut carbon emissions by 100 million tons each year, which is equivalent to the total emissions of Belgium. They highlighted the significant energy consumption associated with crypto mining, noting that a single Bitcoin transaction uses as much electricity as the average person in Pakistan consumes in three years. By comparison, the artificial intelligence model ChatGPT requires ten times the energy of a typical Google search.

In addition to the crypto mining tax, the pair proposed an energy use tax for AI data centers, starting at $0.032 per kilowatt-hour and increasing to $0.052 when accounting for pollution costs. Since these data centers are often located in regions with greener electricity, this tax could generate $18 billion annually for governments.

A September IMF report predicted that crypto mining could account for 0.7% of global carbon emissions by 2027. When combined with emissions from AI data centers, this figure could rise to 1.2%, totaling 450 million tons of carbon emissions. The IMF also estimates that AI and crypto mining together could consume up to 6% of global electricity by 2027.

Hebous and Vernon-Lin argued that implementing these targeted taxes could incentivize crypto miners and AI data centers to adopt more energy-efficient equipment and practices. However, they stressed the importance of global coordination to prevent companies from relocating to jurisdictions with less stringent standards.

The environmental impact of crypto mining remains a topic of debate, especially when compared to other industries. For instance, Amazon's carbon footprint in 2021 was 71.54 million metric tons of CO2, which exceeds Bitcoin’s estimated 65.4 million metric tons. In response to the strain crypto mining places on power grids, some countries, such as Venezuela, have banned the practice. Iran, facing a severe heatwave, has even started offering a $24 reward to those who report illegal crypto miners.

Disclaimer: The information provided in this section is for informational purposes only, doesn't represent any investment advice or FameEX's official view.