IMF Proposes Steep Electricity Tax on Crypto Miners and AI Data Centers to Combat Emissions
The International Monetary Fund (IMF) has put forward a controversial proposal to significantly increase electricity taxes on cryptocurrency miners and artificial intelligence (AI) data centers in an effort to curb rising carbon emissions. The recommendation comes as these energy-intensive industries are projected to consume 3.5% of global electricity by 2027, up from 2% in 2022.
In a recent blog post, IMF economists Shafik Hebous and Nate Vernon-Lin suggested implementing a direct tax of $0.047 per kilowatt hour on electricity used by crypto miners. This tax could increase to $0.089 per kilowatt hour when accounting for local health impacts from air pollution, representing an 85% hike in average electricity costs for miners.
The IMF estimates that such a levy could generate $5.2 billion in annual government revenue globally while reducing emissions by approximately 100 million tons per year – equivalent to Belgium’s current annual emissions. For AI data centers, a slightly lower tax of $0.032 per kilowatt hour (or $0.052 including pollution costs) is proposed, potentially raising up to $18 billion annually.
The rationale behind the tax is to incentivize both industries to adopt more sustainable practices and align with global carbon reduction goals. According to IMF projections, crypto mining alone could contribute to 0.7% of global carbon dioxide emissions by 2027, while the combined emissions from crypto and AI data centers could reach 1.2% of the world total.
However, the proposal has faced criticism from industry experts. Daniel Batten, a Bitcoin environmental analyst, argued that the IMF’s report is misleading and fails to acknowledge the crypto industry’s advancements in sustainability. Batten pointed out that many Bitcoin mining operations are increasingly utilizing renewable energy sources, with an estimated 52.6% of energy consumed by miners now coming from sustainable sources.
Critics also warn that such taxes could significantly hinder the growth of the crypto industry and potentially lead to miners relocating to jurisdictions with lower tax rates. The IMF acknowledges this challenge, emphasizing the need for global coordination to prevent jurisdictional arbitrage.
As the debate continues, policymakers face the complex task of balancing environmental concerns with the potential economic benefits of these emerging technologies. The IMF’s proposal highlights the growing pressure on energy-intensive industries to address their environmental impact as the world grapples with the urgent need to reduce carbon emissions.
