IMF Highlights Crypto Industry's Carbon Footprint Growth and Tax Surge to Curb Emissions

Rising Concerns Over Crypto's Carbon Footprint

The International Monetary Fund (IMF) has released a crucial report focusing on the explosive growth of the crypto industry and its corresponding carbon footprint. Highlighting urgent policy updates, the IMF asserts that without intervention, emissions from cryptocurrency activities are set to rise uncontrollably.

Proposed Tax Hike on Crypto Mining

The IMF suggests an 85 percent tax increase on crypto mining to push the industry towards adopting greener practices. This substantial tax hike aims to reduce the projected emissions linked to crypto mining, which could hit 450 million tons by 2027, amounting to about 1.2 percent of global emissions.

• Direct tax of $0.047 per kilowatt hour suggested to drive cleaner practices.
• With health impacts factored in, the tax may increase to $0.089.

Current State of Crypto's Carbon Emissions

Crypto mining is notably energy-intensive, with transactions requiring as much electricity as an average person in Ghana consumes over three years. Moreover, the IMF report estimates that crypto mining and data centers together consumed two percent of global electricity in 2022, projected to increase to 3.5 percent within three years.

AI's Role in Energy Consumption

The automotive shift towards AI, particularly technologies like ChatGPT, exacerbates energy demands. Reportedly, AI requires ten times more electricity than a simple Google search.

Policy Recommendations for a Greener Future

The IMF strongly urges global regulators to implement a carbon pricing strategy, potentially set at $85 per ton by 2030, promoting a transition away from fossil fuels in both crypto and AI industries. Adopting credits for zero-emission operations will be instrumental in supporting this shift.