The IMF is proposing a global tax targeting Bitcoin mining and artificial intelligence (AI) data centers. The measure aims to reduce CO2 emissions from these industries' growing electricity consumption, estimated at 3.5% of global demand by 2027.
IMF Wants to Tax Bitcoin and Artificial Intelligence (AI)
The International Monetary Fund (IMF) recently proposed a plan to target taxes on Bitcoin mining and artificial intelligence (AI) data centers.According to its publication, the IMF fears that electricity consumption by these industries will increase from 2% to 3.5% of global demand by 2027.
🔋 Further reading – How does Bitcoin mining impact the energy sector?
The IMF is therefore considering a tax of $0.047 per kWh for mining and $0.032 per kWh for data centers.The tax could raise about $5.2 billion for local governments and aims to reduce greenhouse gas emissions by 100 million tons.
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IMF lumps AI and Bitcoin together
The IMF highlights a tax differentiation between the two activitiessuggesting that the carbon emitted by Bitcoin is more harmful than that of data centers.
However, he justifies the differentiation as follows:
“For data centers, a targeted tax on their electricity consumption should be set at $0.032 per kilowatt-hour, or $0.052 including air pollution costs. This is slightly lower than the tax for cryptocurrencies, as data centers are typically located in locations with greener electricity.”
It is important to remember that data centers, due to their need for connectivity to reduce latency, are dependent on the local energy mix, which is only green in some regions of the world.
The IMF continues:
“In the absence of a global carbon price, targeted measures could encourage cryptocurrency miners and data centers to use more energy-efficient equipment and could even motivate the adoption of less energy-intensive cryptocurrency mining methods.”
It is difficult to pin down what the IMF means by “less energy-intensive cryptocurrency mining methods”. This could refer to a transition from the Proof-of-Work (PoW) mechanism to Proof-of-Stake (PoS), as regularly suggested by GreenPeace, a transition that would risk compromising the future of Bitcoin.
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In formulating this argument, The IMF overlooks a crucial point: it is precisely the free choice of energy sources by miners that pushes them to use more environmentally friendly energies..
Today, Bitcoin uses over 55% green energyand remains the only nomadic industry capable of moving to power plants producing surpluses that would be wasted without it.
Finally, the IMF claims that Bitcoin mining and data centers consume 2% of global electricity and that Bitcoin could generate up to 0.7% of global CO2 emissions by 2027.
However, with 29,479 TWh of electricity consumed overall and 150 TWh used annually by Bitcoin mining, the latter represents only 0.51% of global consumption. In addition, with 36.3 Gt of CO2 emitted each year, Bitcoin would only contribute 0.038 Gt, or 0.1% of global emissions.
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Sources: IMF, Adopt a Block
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First attracted by the lure of gain, I am now trapped deep into the rabbit hole. With no way out, I have no choice but to share my knowledge and transmit the passion I have for the blockchain universe. I am also the creator of Adopt a Block, an educational site dedicated to Bitcoin.
Marius Farashi Tasooji
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