The International Monetary Fund (IMF) is suggesting the implementation of energy taxes on crypto miners and data centers to combat carbon emissions. According to two IMF economists, higher energy taxes could help reduce future carbon emissions significantly.
A proposed tax that would increase electricity prices by 85% for crypto miners could generate $5.2 billion in annual government revenue globally while cutting down on annual carbon emissions by about 100 million tons, equivalent to the current emissions of Belgium. The energy consumption of one Bitcoin mining transaction is similar to what an average person in Ghana or Pakistan uses in three years, highlighting the significant impact of crypto mining on energy resources.
The IMF economists point out that crypto mining and data centers accounted for 2% of the world’s electricity demand in 2022 and are projected to increase to 3.5% in the next three years. This could result in carbon emissions reaching 450 million tons by 2027, representing 1.2% of the world’s total emissions.
To address this issue, the IMF recommends imposing higher energy taxes to incentivize companies to reduce emissions. By targeting both crypto miners and data centers, these taxes could encourage the adoption of more energy-efficient practices and technologies. Credits for zero-emission and renewable energy certificates could also play a role in promoting sustainability in these sectors.
Currently, many data centers and crypto miners benefit from tax exemptions and incentives, despite their significant environmental impact. The IMF emphasizes the need for cross-border coordination on energy taxes to prevent companies from relocating to jurisdictions with lower standards.
Overall, the proposed measures aim to steer the crypto mining and data center industries towards more sustainable practices, ultimately helping to curb carbon emissions and mitigate the environmental impact of these energy-intensive operations.
