FameEX Hot Topics | IMF Executives Propose an 85% Increase in Electricity Prices for Crypto Mining

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 tax of $0.047 per kilowatt-hour for the crypto mining industry. They argued that this tax could help align the industry's emissions with global environmental goals. If the local health impact of mining is considered, the tax could increase to $0.089 per kilowatt-hour.

Hebous and Vernon-Lin suggested that the higher tax would raise the average electricity price for crypto miners by 85%, potentially generating $5.2 billion in annual global government revenue while reducing carbon emissions by 100 million tons annually—equivalent to Belgium’s total emissions. They highlighted the significant energy consumption of crypto mining, noting that a single Bitcoin transaction uses as much electricity as an average person in Pakistan does over three years. In comparison, the AI model ChatGPT requires ten times the power of a Google search.

The pair also proposed an energy use tax for AI data centers, set at $0.032 per kilowatt-hour, increasing to $0.052 when accounting for pollution costs. Since these data centers often operate in areas with greener electricity, this tax could generate $18 billion annually for governments.

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

Hebous and Vernon-Lin argued that such targeted taxes might incentivize crypto miners and AI data centers to adopt more energy-efficient equipment and operations. However, they emphasized the need for global coordination to prevent companies from relocating to jurisdictions with lower standards.

There is ongoing debate about the environmental impact of crypto mining compared to other sectors. For example, Amazon's carbon footprint in 2021 was 71.54 million metric tons of CO2, surpassing Bitcoin’s estimated 65.4 million metric tons. Some countries, like Venezuela, have banned crypto mining due to its strain on the power grid, while Iran offers a $24 reward for reporting illegal crypto miners amid a severe heatwave.

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