Cryptocarbon: How Much Is the Corrective Tax?
IMF Working Papers, September 15, 2023
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- Cryptocarbon: How Much Is the Corrective Tax?
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Bibliographic details
- Authors: Shafik Hebous
- Published: September 15, 2023
- Series: IMF Working Papers
- DOI: https://doi.org/10.5089/9798400256080.001
Summary findings
- Global demand for electricity by crypto miners reached that of Australia or Spain.
- Crypto mining resulted in 0.33% of global CO2 emissions in 2022.
- The average corrective excise on the electricity used by crypto miners is estimated at USD 0.045 per kWh.
- Including air pollution costs raises the corrective excise to USD 0.087 per kWh.
- Country-specific corrective tax estimates vary depending on countries' electricity sources.
Projections and scenarios
- Projections suggest sustained future electricity demand from crypto mining.
- CO2 emissions from crypto mining are projected to increase further if:
- crypto prices significantly increase, and
- the energy efficiency of mining hardware is low.
Corrective tax calculations and scope
- The corrective excise targets the electricity used by crypto miners to address negative externalities related to global warming.
- When air pollution costs are incorporated into the social cost calculation, the estimated tax more than doubles from USD 0.045 per kWh to USD 0.087 per kWh.
- Heterogeneity in national electricity mixes produces variation in country-specific corrective excise levels.
Policy implications and recommendations
- Implement a corrective excise on electricity consumed by crypto mining to internalize greenhouse gas externalities.
- Adjust excise levels to reflect:
- country-specific electricity generation sources, and
- inclusion of air pollution costs where relevant.
- Monitor crypto prices and mining hardware energy efficiency as key determinants of future electricity demand and emissions trajectories.
Key statistics and metadata preserved from the source
- 0.33% of global CO2 emissions in 2022 attributable to crypto mining.
- USD 0.045 per kWh: average corrective excise to address global warming.
- USD 0.087 per kWh: corrective excise when air pollution costs are included.
- Publication: IMF Working Paper No. 2023/194.
- Pages: 32.
- DOI: https://doi.org/10.5089/9798400256080.001
- Author: Shafik Hebous.
- Date: September 15, 2023.
Source: "Cryptocarbon: How Much Is the Corrective Tax?", IMF Working Papers No. 2023/194.
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- Working Paper