Cryptocarbon: How Much Is the Corrective Tax?

Shafik Hebous and Nate Vernon-Lin

No 2023/194, IMF Working Papers from International Monetary Fund

Abstract: 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.

Keywords: Corrective Taxes; Carbon Tax; Mitigation Policy; Crypto Assets; Crypto Mining; Bitcoin; electricity demand; corrective tax; energy efficiency of mining hardware; pollution cost; Bitcoin price; Greenhouse gas emissions; Electricity; Mining sector; Virtual currencies; Global (search for similar items in EconPapers)
Pages: 32
Date: 2023-09-15
New Economics Papers: this item is included in nep-ene, nep-env, nep-pay, nep-pbe and nep-pub
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Citations: View citations in EconPapers (1)

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Journal Article: Cryptocarbon: How much is the corrective tax? (2024)
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