The IMF report suggests a $0.047 per kilowatt hour tax on cryptocurrency mining to curb emissions, potentially rising to $0.089 considering health impacts.
Cryptocurrency mining and AI data centers are projected to consume 3.5% of global electricity by 2025, similar to Japan's current usage.
Industry leaders criticized the IMF report for oversimplifying energy consumption issues, highlighting the need to distinguish between AI and crypto mining impacts.
On August 15, the International Monetary Fund released a report titled 'Carbon Emissions from AI and Crypto Are Surging and Tax Policy Can Help.' The report emphasizes the urgent need for increased electricity taxes for cryptocurrency miners and AI data centers.
Proposed Tax Increases for Crypto Mining and AI Data Centers
The research suggests a $0.047 per kilowatt hour tax aimed exclusively at the cryptocurrency mining business. This approach is likely to compel mines to reduce emissions in accordance with international objectives. According to the paper, if the impact of air pollution on local health is included, the recommended tax rate will increase to $0.089.
Rising Energy Demand and Industry Criticism
According to the IMF estimate, the combined carbon footprint of cryptocurrency mining and AI data centers accounted for 2% of global electricity demand in 2022. Projections show that this figure could grow to 3.5% by 2025. According to the IMF, this increase is similar to Japan's present electricity usage, the world's fifth-largest user.
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However, the report has faced sharp criticism from industry leaders. Daniel Batten, a Bitcoin environmental analyst and Marathon Digital advisory board member, described the IMF’s findings as misleading and poorly researched.
Batten criticized the IMF for oversimplifying the issue by failing to distinguish between the energy consumption patterns of AI data centers and crypto mining operations. While both sectors are energy-intensive, their environmental impacts differ significantly.
Batten also pointed out that the IMF’s report overlooks the potential environmental benefits of responsible crypto mining. He referenced a study by the Digital Assets Research Institute, which showed that as Bitcoin’s price increased, mining emissions have not risen proportionally.
Shift Towards Sustainable Mining Practices
Crypto mining has been banned in some areas, like Venezuela and Iran, due to worries about power consumption. However, it is worth noting that many miners are now actively exploring efficient and sustainable mining methods, with some even reusing surplus or discarded energy.
The IMF report has ignited controversy in the crypto and AI businesses, with different perspectives on the suggested tax measures. As the worldwide need for electricity rises, the debate over sustainable practices in these energy-intensive industries is set to grow.
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