IMF proposes a tax on Bitcoin and data centers

The International Monetary Fund has proposed imposing a direct tax on cryptocurrency mining, especially Bitcoin, in the amount of $ 0.047 per kilowatt-hour of electricity consumed. This measure aims to reduce carbon emissions resulting from these activities, stressing that taxes can be an effective way to push companies to reduce their environmental impact.

The report explained that imposing this tax would encourage the cryptocurrency mining industry to adopt more sustainable practices. If we take into account the health effects resulting from air pollution, the tax could rise to $ 0.089, which means an 85% increase in the average cost of electricity paid by miners. This tax is expected to generate global government revenues of up to $ 5.2 billion annually, and contribute to reducing carbon emissions by 100 million tons annually, which is equivalent to the carbon emissions of the state of Belgium.

In 2022, cryptocurrency mining and data centers accounted for about 2% of global electricity demand, and this is expected to rise to 3.5% by 2025, according to estimates from the International Energy Agency. The report explained that a single Bitcoin transaction requires the same amount of electricity as an average person in Ghana or Pakistan consumes in three years, reflecting the significant impact of these operations on the environment. Moreover, artificial intelligence queries, such as ChatGPT, require 10 times the electricity consumed by a single Google search. Despite the potential economic and social benefits of cryptocurrency mining and the use of data centers, the environmental impact of these activities is a growing concern. The International Monetary Fund expects carbon emissions from cryptocurrency mining to reach 0.7% of total global emissions by 2027. If we include data center emissions, this percentage could reach 1.2% of total emissions.

The report also called for imposing a tax on electricity use in data centers at a value of $0.032 per kilowatt hour, rising to $0.052 when air pollution costs are included. Although this tax is lower than the proposed one for cryptocurrency mining due to data centers relying on green electricity, it could generate up to $18 billion in revenue annually.

However, despite the environmental damage, cryptocurrency mining companies and data centers enjoy generous tax breaks in many countries, raising questions about the effectiveness of these incentives in light of the negative environmental impacts.

With the window of opportunity to contain rising temperatures closing rapidly, the report stresses the importance of coordinating global efforts and imposing targeted taxes on energy-intensive industries to help combat climate change.