IMF proposes global energy tax on crypto miners to reduce carbon emissions and generate $5.2 billion for governments
The International Monetary Fund (IMF) officials Shafik Hebous and Nate Vernon-Lin have recently proposed a substantial increase in electricity costs for crypto miners worldwide.
According to their proposal, a tax on the energy used by these miners, set at $0.047 per kilowatt-hour, could potentially increase miners’ energy costs by 85%. This initiative aims to reduce carbon emissions from the mining industry in line with global emission reduction goals.
Environmental and financial impacts of the proposal
According to the authors, this tax could not only help reduce carbon emissions by 100 million tons per year, equivalent to Belgium’s annual emissions, but also generate $5.2 billion in revenue for governments worldwide.
However, they also noted that if the local impact of miners on public health is taken into account, the tax could increase to $0.089 per kilowatt-hour.
The authors justify this proposal by linking it to global carbon emission reduction goals. They argue that Bitcoin miners are among the main contributors to global energy consumption and, therefore, the overall carbon footprint.
They claim that a single Bitcoin transaction consumes as much electricity as an average resident in Pakistan does in three years, and that a request to ChatGPT requires ten times more energy than a simple Google search. Additionally, they estimate that crypto mining could account for 0.7% of global carbon emissions by 2027, a figure that could rise to 1.2% when including AI data center emissions.
A disputable methodology and misleading comparisons
However, this IMF report seems to use a questionable methodology, employing misleading rhetorical techniques to wrongly link Bitcoin mining to massive carbon emissions without providing solid evidence.
For example, the report opens with a dubious comparison stating that ‘crypto assets and artificial intelligence have in common high energy consumption.’ This approach is a classic rhetorical scheme where one seeks to discredit a subject (Bitcoin mining) by comparing it to another subject perceived negatively (AI data centers) without establishing a solid factual connection between the two.
Selective data analysis
The IMF report also uses alarmist projections to support its conclusions. For instance, the authors cite a hypothetical model from the University of Cambridge that assumes all Bitcoin mining operations could use coal by 2027, an entirely unrealistic assumption.
In reality, the Bitcoin mining sector is rapidly moving away from fossil fuels, with more and more operators turning to renewable energy sources. Ignoring this trend and presenting an extreme scenario as a future probability is nothing more than an attempt to manipulate perceptions.
A positive impact of Bitcoin mining
Actual data tells a different story. Recent research, including studies published by the Digital Assets Research Institute, shows that carbon emissions from Bitcoin mining have not increased proportionally to the rise in hash rate or the Bitcoin price.
On the contrary, studies like Rhodes et al. have demonstrated that flexible data centers, such as those used for Bitcoin mining, have a net decarbonization effect on electricity grids, unlike AI data centers, which tend to have the opposite effect.
A superficial solution to a complex problem
By claiming that introducing a global energy tax could solve emissions problems related to crypto mining, the IMF adopts a superficial solution to a complex problem. Not only does this approach ignore ongoing industry efforts to use cleaner energy sources, but it could also have unintended consequences by incentivizing miners to move to jurisdictions with weaker environmental standards, exacerbating the problem rather than solving it.
Conclusion: A proposal lacking rigor
Ultimately, this IMF report appears to be more motivated by a desire to discredit the crypto sector than a genuine concern for the environment. The methodology used, the misleading comparisons, and the deliberate disregard for current data and market trends raise serious questions about the credibility of this report.
Before taking such drastic measures as introducing a global energy tax on crypto mining, it would be essential to adopt a more honest and rigorous approach based on current data and a true commitment to reducing carbon emissions.
