‍Photo credit: James MacDonald/Bloomberg

The International Monetary Fund (IMF) executives Shafik Hebous and Nate Vernon-Lin hinted that increasing the taxes may be necessary to curb the rising global carbon emissions from AI operations and crypto mining. 

In a blog published on Aug. 15, Hebous and Vernon-Lin claimed that a direct tax of $0.047 per kilowatt hour “would drive the crypto mining industry to curb its emissions in line with global goals.” 

The IMF executives also pointed out that the tax rate would rise to $0.089 if the air pollution’s impact on local health is considered, which would represent an 85% increase in the average electricity price for crypto miners. 

The targeted tax rate for AI data centers would need to be set at $0.032 per kilowatt hour, or $0.052 including the air pollution costs, according to the analysis conducted by IMF experts. The tax costs are lower for AI data centers because they tend to be in “locations with greener electricity.”   

How much electricity do AI and crypto mining consume?

Stating why the tax rates should be increased, Hebous and Vernon-Lin explained that one Bitcoin transaction requires roughly the same amount of electricity as the average person in Ghana or Pakistan consumes in three years. 

Meanwhile, Al-generative tools like ChatGPT require “10 times more electricity than a Google search.” 

Upon further examination, Hebous and Vernon-Lin found that crypto mining and data centers together accounted for 2% of world electricity demand in 2022. They claimed that the carbon emissions could climb to 3.5% — equivalent to the current consumption of Japan — over the next three years as per the data from the International Energy Agency.  

Apart from the electricity consumption, IMF’s data revealed that crypto mining could generate 0.7% of the global carbon dioxide emissions by 2027. Including the analysis of AI data centers, carbon emissions could reach 450 million tons — 1.2% of the worldwide carbon emission — by 2027.

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