As an analyst who has spent years studying and analyzing the global economy, energy consumption, and environmental impact, I find myself at a crossroads when it comes to the latest proposals by the International Monetary Fund (IMF) regarding crypto mining and AI data centers.
Over the last few years, the Bitcoin mining sector has experienced significant advancements; however, the International Monetary Fund (IMF) remains persistent in finding strategies to intensify the pressure on this industry. Recently, two IMF officials suggested that it could be beneficial for the average electricity cost associated with cryptocurrency mining to increase by approximately 85%. They further explained that such a move would significantly reduce carbon emissions.
Shafik Hebous, deputy head of the Fiscal Affairs Department at the IMF, and economist Nate Vernon-Lin from the climate policy division, suggested a tax of 4.7 cents per kilowatt-hour for cryptocurrency mining operations. During their discussion on August 15th, these two IMF leaders expressed that this tax would encourage the crypto mining industry to reduce its carbon footprint in accordance with global objectives. They also added that considering the local health effects of mining could raise the tax to 8.9 cents per kilowatt-hour.
According to Vernon-Lin and Hebous, an elevated tax on cryptocurrency mining could potentially hike up the typical electricity cost for miners by a whopping 85%. This significant rise would not only lead to a decrease in emissions by approximately 100 million tons each year, but also generate additional $5.2 billion in revenue for governments worldwide.
To clarify, IMF executives pointed out that the energy consumption of a single Bitcoin transaction is roughly equivalent to the electrical usage of an average resident in Pakistan over a span of three years. Additionally, they highlighted that artificial intelligence models such as ChatGPT require around ten times more power than carrying out a regular Google search.
In addition, Vernon-Lin and Hebous have suggested increasing the energy tax on AI data centers’ electricity consumption from the current rate of $0.032 per kilowatt hour to $0.052, taking into account pollution costs. This is because these data centers are frequently located in regions with greener electricity, as reported by IMF officials. Such a change could potentially bring about an annual revenue of $18 billion for the respective governments.
IMF Crackdown on Crypto and AI
In September 2023, the International Monetary Fund (IMF) published a report indicating that crypto mining might contribute around 0.7% to the global carbon emissions by the year 2027. When you factor in emissions from AI data centers, this figure could rise to approximately 1.2%, which equates to about 1.2% of the total 450 million tons of emissions worldwide.
Photo: IMF
Hebous and Vernon-Lin propose that raising taxes could motivate AI data centers and crypto miners to adopt energy-efficient technology and perform less power-consuming tasks. They stated that international cooperation would be crucial for the taxation, as stricter regulations in one area might prompt these entities to move their operations to regions with less stringent standards.
As a crypto investor, I’m closely watching the developments in the Bitcoin mining sector, particularly the pressure exerted by the International Monetary Fund (IMF). However, should former President Donald Trump secure another term at the White House, he’s expressed his intention to provide additional support to our industry.
Countries such as Venezuela and Iran have outlawed cryptocurrency mining because of the strain it puts on their electrical grids. To combat this issue in Iran, they are offering a $24 reward for anyone who reports illegal crypto miners. These nations face challenges with their power grids, particularly during periods of intense heatwaves.
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2024-08-16 11:38