IMF warns of rising energy consumption, proposes taxation to regulate crypto industry

In response, the IMF proposes increasing the electricity tax on cryptocurrency miners by 85%, which, according to the organization, could force the industry to become more environmentally responsible. The main idea is to use targeted taxation that would encourage miners to reduce their electricity consumption and switch to more sustainable energy sources.

Cryptocurrency mining requires high-performance equipment that consumes a huge amount of electricity. To better understand the scale, the IMF gives the following example: one Bitcoin transaction uses about as much electricity as the average person in Ghana or Pakistan consumes in three years. This energy consumption puts pressure on governments and organizations to find ways to mitigate the negative impact on the environment.

In a blog post, the IMF proposed a direct tax of $0.047 per kilowatt-hour to incentivize the crypto industry to meet global emissions reduction targets. Such a tax would not only reduce energy consumption but also promote the transition to clean energy sources.

The IMF estimates that the tax could generate around $5.2 billion per year and help reduce global emissions by 100 million tons, equivalent to the annual emissions of Belgium. If the negative effects of air pollution on local populations are also taken into account, the tax rate could be increased to $0.089 per kilowatt-hour, which would lead to an 85% increase in the cost of electricity for miners.

The proposed tax is therefore seen as one possible way to address the environmental issues associated with the crypto industry while generating additional revenue for governments.

With global pressure for climate action mounting, the issue of energy consumption and emissions in the crypto industry is becoming increasingly relevant to policymakers.