The International Monetary Fund (IMF) has proposed a significant tax increase on crypto mining activities in order to reduce global CO2 emissions.

Shafik Hebous, deputy department head of the IMF’s Financial Affairs Department, and Nate Vernon-Lin, economist in the Climate Policy Department, have suggested that increasing the average cost of electricity for crypto miners by 85% through taxes could lead to a significant reduction in emissions.

IMF officials argue that this tax, set at $0.047 per kilowatt hour, could bring the crypto mining industry’s emissions into line with global environmental goals.

Implementing this tax could increase the average price of electricity for crypto miners by 85%, generating $5.2 billion in annual government revenue worldwide. Hebous and Vernon-Lin also claim that the tax could reduce emissions by 100 million tons per year, equivalent to Belgium’s annual CO2 emissions.

In addition, a higher tax of $0.089 per kilowatt hour could be considered to take into account the health impacts of local miners.

The IMF proposes a similar approach for AI data centers, proposing a tax of $0.032 per kilowatt hour, which could rise to $0.052 once environmental costs are taken into account. This tax on AI energy consumption could raise $18 billion annually, increasing the environmental benefits even further.

Despite the potential benefits, the IMF recognizes the need for global coordination to prevent crypto miners from relocating to countries with lower tax standards.

The proposal also addresses concerns about the relative impact of crypto mining on global emissions. For example, Amazon’s carbon footprint was reportedly 71.54 million tons in 2021, surpassing Bitcoin’s estimated 65.4 million tons.

The tax proposed by the IMF is intended to encourage the use of energy-efficient appliances and less energy-intensive operations. However, global cooperation is essential for effective implementation.

The IMF’s proposal to tax crypto mining and AI data centers could be an important step towards reducing global carbon emissions, but its success depends on international cooperation and the adoption of more sustainable practices within the industry.

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