By Albert Ennin Tax power-hungry Bitcoin and AI to curb emissions – IMF | Your recent Bitcoin transaction required roughly the same amount of electricity as the average person in Ghana consumes in three years.
ChatGPT queries also require 10 times more electricity than a Google search due to the electricity consumed by AI data centers.
A recent analysis by the IMF revealed that in 2022, the combined electricity demand from crypto mining and data centers amounted to 2 percent of the world’s total electricity consumption.
This figure is projected to rise to 3.5 percent in the next three years, equivalent to the current electricity usage of Japan, the world’s fifth largest electricity consumer.
To address this issue, the IMF has suggested implementing a direct tax of $0.047 per kilowatt hour, which would incentivize the crypto-mining industry to reduce emissions in line with global environmental goals.
“If considering air pollution’s impact on local health as well, that tax rate would rise to $0.089, translating into an 85 percent increase in average electricity price for miners. Such a levy would raise annual government revenue of $5.2 billion globally and reduce annual emissions by 100 million tons (around Belgium’s current emissions).
For data centers, a targeted tax on their electricity use would need to be set at $0.032 per kilowatt hour, or $0.052 including air pollution costs. It is slightly lower than for crypto because data centers tend to be in locations with greener electricity. This could raise as much as $18 billion annually,” a recent IMF article noted.
Currently, many data centers and crypto miners enjoy generous tax exemptions and incentives on income, consumption, and property.
The IMF noted that, considering the environmental damage, the lack of significant employment, and pressures on the electrical grid (possibly raising prices for households and reducing demand for other low-emission goods, such as electric vehicles), the net benefits of these special tax regimes are unclear at best.
AviationGhana | Tax power-hungry Bitcoin and AI to curb emissions – IMF
