IMF Working Papers

Cryptocarbon: How Much Is the Corrective Tax?

By Shafik Hebous, Nate Vernon-Lin

September 15, 2023

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Format: Chicago

Shafik Hebous, and Nate Vernon-Lin. Cryptocarbon: How Much Is the Corrective Tax?, (USA: International Monetary Fund, 2023) accessed October 6, 2024

Disclaimer: IMF Working Papers describe research in progress by the author(s) and are published to elicit comments and to encourage debate. The views expressed in IMF Working Papers are those of the author(s) and do not necessarily represent the views of the IMF, its Executive Board, or IMF management.

Summary

With increasing awareness of past environmental damage from crypto mining, questions arise as to how persistent the problem will be in the future and how taxation can help in addressing this negative externality. We estimate that the global demand for electricity by crypto miners reached that of Australia or Spain, resulting in 0.33% of global CO2 emissions in 2022. Projections suggest sustained future electricity demand and indicate further increases in CO2 emissions if crypto prices significantly increase and the energy efficiency of mining hardware is low. To address global warming, we estimate the corrective excise on the electricity used by crypto miners to be USD 0.045 per kWh, on average. Considering also air pollution costs raises the tax to USD 0.087 per kWh. Country-specific estimates vary depending on their electricity sources.

Subject: Carbon tax, Commodities, Economic sectors, Electricity, Environment, Greenhouse gas emissions, Mining sector, Taxes, Technology, Virtual currencies

Keywords: Bitcoin, Bitcoin price, Carbon Tax, Corrective tax, Corrective Taxes, Crypto Assets, Crypto Mining, Electricity, Electricity demand, Energy efficiency of mining hardware, Global, Greenhouse gas emissions, Mining sector, Mitigation Policy, Pollution cost, Virtual currencies

Publication Details

  • Pages:

    32

  • Volume:

    ---

  • DOI:

    ---

  • Issue:

    ---

  • Series:

    Working Paper No. 2023/194

  • Stock No:

    WPIEA2023194

  • ISBN:

    9798400256080

  • ISSN:

    1018-5941

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