TL;DR
- Cryptocurrency mining and data centers account for 2% of global electricity consumption and nearly 1% of carbon emissions.
- These figures are expected to rise to 3.5% of global electricity consumption in three years, a level similar to Japan’s total consumption.
- The IMF proposes a tax on electricity consumption for these industries to reduce their environmental impact and encourage the use of cleaner energy.
The increase in electricity consumption and carbon emissions from the cryptocurrency mining industry and data centers has become an environmental concern. According to a recent report from the International Monetary Fund (IMF), these activities currently account for 2% of global electricity consumption and nearly 1% of global emissions.
Projections indicate that over the next three years, these figures could rise to 3.5% of global electricity consumption, a level comparable to the total consumption of Japan, the world’s fifth-largest electricity consumer.
Cryptocurrency mining, in particular, stands out for its intense energy demand. A single Bitcoin transaction, for example. Requires the same amount of electricity that an average person in countries like Ghana or Pakistan consumes over three years. This level of energy consumption, combined with that of data centers supporting artificial intelligence applications. Poses serious challenges in terms of greenhouse gas emissions.
It is estimated that by 2027, cryptocurrency mining could generate up to 0.7% of global carbon dioxide emissions. While data centers could contribute 450 million tons of emissions, approximately 1.2% of the global total.
The Cost of Crypto Mining Could Increase by Up to 85%
Given this situation. IMF has proposed a series of fiscal measures that could help mitigate the environmental impact of these industries. One of the proposals is the implementation of a direct tax on the electricity consumption of mining and data centers. This tax, estimated at $0.047 per kilowatt-hour (kWh) for cryptocurrency mining and $0.032 per kWh for data centers. Aims to incentivize the use of more efficient equipment and the adoption of cleaner energy sources.
If the impact of air pollution on local health is included, the tax rate could increase to $0.089 per kWh. Which would translate into an 85% increase in the average electricity price for cryptocurrency miners.
