On August 15, the International Monetary Fund (IMF) released a report titled “Carbon Emissions from Artificial Intelligence and Cryptocurrencies Are Soaring, and Tax Policy Can Help.” The report calls for significant increases in electricity bills for cryptocurrency miners and artificial intelligence data centers.
The International Monetary Fund believes that the proposed tax will encourage more sustainable practices and align these industries with global carbon reduction goals.
IMF Proposes New Tax Measures for Cryptocurrencies and Artificial Intelligence
In a recent report, the IMF recommended a tax of $0.047 per kilowatt-hour to incentivize the cryptocurrency mining industry to reduce emissions in line with global goals. Additionally, taking into account the impact of air pollution on local health, the proposed tax rate may increase to US$0.089, resulting in an 85% rise in average electricity costs for miners.
“Such a tax would increase global government revenue by $5.2 billion per year and reduce emissions by 100 million tons annually,” noted the IMF.
The IMF also suggested a small tax cut of $0.032 per kilowatt-hour for artificial intelligence data centers, given their preference for using green energy sources.
According to the IMF, these industries’ carbon footprint continues to grow, expected to represent 2% of global electricity demand by 2022 and increase to 3.5% by 2025, equivalent to Japan’s current electricity consumption.
Criticism of IMF’s Findings
Industry leaders have criticized the IMF report, with Bitcoin environment analyst Daniel Batten arguing that the report inaccurately links the carbon impact of AI data centers to Bitcoin mining. He emphasized the need to differentiate between the two industries’ energy consumption and environmental impacts.
“While there is no evidence that Bitcoin mining increases carbon emissions, there is significant evidence that emissions from AI data centers are rising. Equating Bitcoin with AI in terms of emissions is misleading,” Batten stated.
Batten highlighted the potential environmental benefits of responsible cryptocurrency mining and criticized the IMF’s lack of comprehensive research on the topic.
Transition to Sustainable Practices
Despite challenges, the cryptocurrency mining industry is actively exploring sustainable practices. Reports indicate a shift towards utilizing renewable energy sources, with a significant portion of energy consumed by Bitcoin mining operations already being sourced from renewables.
As the industry continues to evolve, it is important for policymakers to consider the nuanced differences between various energy-intensive sectors and encourage responsible environmental practices.
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