IMF Proposes Global Crypto Mining Energy Tax: Misleading Report?

1. The IMF is proposing a global tax on crypto miners' energy, potentially increasing energy costs by 85%, to reduce carbon emissions and generate $5.2 trillion for governments.
2. The report suggests that Bitcoin mining could account for 0.7% of global carbon emissions by 2027, but uses questionable methodology and alarmist projections, ignoring the industry's increasing use of renewable energy.
3. The IMF proposal is criticised for its lack of rigour and could encourage miners to move to countries with more lax environmental standards, thus exacerbating the problem of carbon emissions.

Two senior officials of the International Monetary Fund (IMF), Shafik Hebous And Nate Vernon-Linhave recently proposed a Substantial increase in electricity costs for crypto miners across the world.

According to their proposal, a tax on the energy used by these minersset at $0.047 per kilowatt-hour, could potentially increase miners' energy costs by 85%. The move aims to reduce carbon emissions from the mining industry in line with global emission reduction targets.

Environmental and financial impacts of the proposal

What do crypto assets and artificial intelligence have in common? They both are energy hungry.

According to the authors, this tax could not only contribute to reducing carbon emissions by 100 million tonnes per yeara figure equivalent to Belgium's annual emissions, but also generating $5.2 billion in revenue for governments around the world.

However, they also noted that if one takes into account the local impact of miners on public health, the tax could climb to $0.089 per kilowatt-hour.

The authors of the report justify this proposal by linking it to global carbon emission reduction goals. According to Hebous and Vernon-LinBitcoin miners are among the major contributors to global energy consumptionand therefore to the overall carbon footprint.

They claim that a single Bitcoin transaction consumes as much electricity as an average Pakistani in three years, and that a query to ChatGPT requires ten times more energy than a simple Google search. Furthermore, they estimate that the Crypto mining could account for 0.7% of global carbon emissions by 2027a figure that could reach 1.2% if we add emissions from AI data centers.

Questionable methodology and misleading comparisons

However, this IMF report appears to use questionable methodology, resorting to misleading rhetorical techniques to falsely link Bitcoin mining to massive carbon emissions without providing solid evidence.

For example, the report opens with a dubious comparison by stating that “ Crypto assets and artificial intelligence have high energy consumption in common “This approach is a classic rhetorical ploy where one seeks to discredit one topic (Bitcoin mining) by comparing it to another poorly perceived topic (AI data centers) without establishing a solid factual connection between the two.

A selective analysis of data

THE IMF report also uses alarmist projections to support their conclusions. For example, the authors cite a hypothetical model from Cambridge University that assumes that all Bitcoin mining operations could use coal by 2027a totally unrealistic hypothesis.

In fact, the Bitcoin mining industry is rapidly moving away from fossil fuels, with more and more operators turning to renewable energy sources. Ignoring this trend and presenting an extreme scenario as a future probability is nothing more than an attempt to manipulate perceptions.

A positive impact of Bitcoin mining

The real data tells a very different story. Recent research, including studies published by the Digital Assets Research Institute, shows that Bitcoin mining carbon emissions have not increased proportionally to hashrate increases or the price of Bitcoin.

On the contrary, some studies, such as that of Rhodes et al., have shown that flexible data centerslike those used for Bitcoin mining, have a net effect of decarbonization on electricity networksunlike AI data centers which tend to have the opposite effect.

A superficial solution to a complex problem

Claiming that introducing a global energy tax could solve the emissions problems associated with crypto mining, IMF adopts superficial solution to complex problemNot only does this approach ignore ongoing efforts within the industry to use cleaner energy sources, it could also have perverse effects by encouraging miners to move to jurisdictions with lower environmental standards, thereby exacerbating the problem rather than solving it.

Conclusion: a proposal that lacks rigor

Ultimately, this IMF report seems more motivated by a desire to discredit the crypto sector than by a genuine concern for the environment. The methodology used, the misleading comparisons and the deliberate ignorance of current data and market trends raise serious questions about the credibility of this report.

Before taking such drastic measures as introducing a Global Energy Tax on Crypto Miningit would be essential to adopt a more honest and rigorous approach, based on current data and a real commitment to reducing carbon emissions.

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