IMF Proposes 85% Global Energy Tariff Increase for Bitcoin Miners

Raising electricity costs for miners worldwide by 85% through taxation could significantly reduce carbon emissions, according to experts from the IMF.

Shafik Hebous from the Fiscal Affairs Department and climate policy economist Nate Vernon-Lin noted that cryptocurrency mining and data centers could account for up to 3.5% of global energy consumption by 2025. This is equivalent to the current level of Japan, the world’s fifth-largest consumer.

The IMF estimates that by 2027, these activities could generate up to 450 million tonnes of carbon emissions, or 1.2% of the global total.

Hebous and Vernon-Lin are confident that fiscal policy can influence this outcome.  

“A direct tax of $0.047 per kWh would compel the mining industry to reduce emissions in line with global targets. Considering the impact of air pollution on public health, the rate would rise to $0.089, leading to an 85% increase in the average electricity price,” the experts stated.

According to their calculations, the levy would increase annual government revenues by $5.2 billion and reduce carbon emissions by 100 million tonnes (approximately Belgium’s current level).

For data centers, IMF specialists proposed a similar tax of $0.032 and $0.052 per kWh. They explained the lower rates by noting that these facilities are “generally located in areas with greener electricity” than mining farms. The levy could yield up to $18 billion annually for authorities.

Hebous and Vernon-Lin emphasized that these activities currently benefit from “generous tax breaks.”

“Given the environmental damage, lack of significant employment, and pressure on the power grid […], the benefits of these fiscal regimes are at best unclear,” the experts stated.

They acknowledged that implementing the proposed tax on energy consumption for mining and data centers must be globally coordinated. Otherwise, businesses will simply relocate to more favorable jurisdictions.

In March 2023, the US Treasury Department advocated for a 30% excise tax on electricity consumed by cryptocurrency miners.