What to know

  • The IMF proposes an 85% tax hike on crypto mining electricity costs, targeting $0.045 per kilowatt hour to reduce global emissions.
  • Crypto mining and data centers consume 2% of global electricity, projected to reach 3.5% in three years - equivalent to Japan's current usage.
  • The proposed tax could generate $5.2 billion annually and cut emissions by 100 million tons, comparable to Belgium's yearly carbon output.

The world of cryptocurrency mining faces a potential shake-up as major financial institutions push for new environmental taxes. The International Monetary Fund has rolled out a bold proposal to tackle the growing environmental footprint of crypto mining operations.

A single Bitcoin transaction gobbles up as much electricity as an average person in Ghana or Pakistan uses in three years. This eye-popping energy consumption has caught the attention of global policymakers.

The proposed tax would bump up electricity costs for miners by a whopping 85%, setting the rate at $0.047 per kilowatt hour. When you factor in local health impacts from pollution, this could jump even higher to $0.089 per kilowatt hour.

The Biden administration has jumped on the bandwagon too, proposing its own 30% tax on miners' total energy costs in the US. This would roll out gradually - starting at 10% in 2025, climbing to 20% in 2026, and hitting the full 30% mark in 2027.

Critics from the crypto industry have come out swinging against these proposals, calling them a backdoor ban on mining. However, experts warn that without global coordination, miners might simply pack up and move to countries with laxer environmental standards.

The stakes are high - crypto mining and data centers currently chew through 2% of the world's electricity and pump out nearly 1% of global emissions. These numbers are set to balloon in the coming years, potentially matching Japan's entire electricity consumption by 2027.

The tax could serve as a golden goose for governments, potentially laying $5.2 billion in annual revenue. More importantly, it could slash emissions by 100 million tons - equivalent to wiping out Belgium's yearly carbon footprint.

The ball is now in the court of global policymakers to coordinate these efforts. Without worldwide cooperation, these well-intentioned tax proposals might just send miners shopping for new homes in countries where the grass is greener - or rather, where the regulations are lighter.

Source: Global Solidarity Levies Task Force | Via: The Verge