IMF economists propose electricity tax to reduce environmental impact of crypto mining and AI industries

Odaily News The International Monetary Fund (IMF) published a blog post this week written by Shafik Hebous, an economist at the IMF’s Fiscal Affairs Department, and another economist, Nate Vernon-Lin. The authors highlighted the environmental challenges posed by crypto mining and artificial intelligence data centers, noting that these sectors already account for 2% of global electricity consumption. “According to our estimates based on International Energy Agency forecasts, this share could climb to 3.5% within three years,” they added. This increasing energy use could push crypto mining’s contribution to global carbon emissions to 0.7% by 2027, the report warns, stressing that “Extending the analysis to data centers (according to IEA estimates) means that carbon emissions from these sectors could reach 450 million tons by 2027, or 1.2% of the world’s total.” To address this issue, Hebous and Vernon-Lin propose targeted electricity taxes, “Tax systems are a way to induce companies to reduce emissions. According to IMF estimates, a direct tax of $0.047 per kilowatt-hour would push the cryptocurrency mining industry to curb its emissions in line with global targets.” However, critics argue that these taxes could severely hamper the development of the crypto industry. In addition, some studies have also shown that the environmental impact of cryptocurrency mining is still relatively small compared to other major industries such as e-commerce or traditional finance. (Bitcoin.com)