IMF Proposes Major Electricity Tax Hike for Crypto Miners

On Thursday, the International Monetary Fund (IMF) suggested raising electricity taxes for cryptocurrency miners by as much as 85% to address global carbon emissions.

This proposal aims to help reduce the environmental impact of crypto mining, which has been exacerbated by recent events such as Bitcoin’s April halving, pushing miners to improve efficiency.

The IMF estimates that such a tax could add $5.2 billion to government revenues worldwide and cut global carbon emissions by 100 million tonnes, roughly equivalent to Belgium’s emissions. However, there is concern that this measure may be less effective if miners relocate to regions with lower electricity costs.

In addition, the IMF has put forward a specific electricity tax for AI data centers. This tax would be $0.032 per kilowatt-hour (kWh), or $0.052 per kWh including air pollution costs, potentially generating $18 billion in annual revenue. The tax rate for AI centers is lower because these facilities generally use cleaner energy sources.

The IMF highlighted that both crypto mining and data centers together account for 2% of global electricity use and nearly 1% of global carbon emissions. Implementing a $0.047 per kWh tax on crypto mining electricity could align the industry more closely with global climate objectives. If air pollution impacts are factored in, the tax might increase to $0.089 per kWh, reflecting an 85% rise in electricity costs for miners.

For the proposed tax to be effective, the IMF stresses the need for international cooperation to avoid miners shifting to countries with more favorable conditions, which could diminish the overall environmental benefits.