Crypto’s Environmental Footprint – A Bitcoin Advocate Challenges the IMF
- A recent IMF report showed that crypto mining and data centers accounted for 2% of global electricity consumption in 2022. This is anticipated to reach 3.5% by 2027.
- The IMF proposes a crypto-carbon' tax that could increase miners' electricity costs by 85%andslash emissions by 100M tons a year.
- A renowned Bitcoin advocate argues against the IMF's findings, saying its report is poorly researched and overlooks technological advancements.
A recent damning report by the IMF has fanned the fires of the debate surrounding crypto's environmental footprint. According to it, we'll see a substantial rise in carbon emissions due to increased Bitcoin mining and AI use.
To mitigate this, the IMF has proposed a crypto-carbon' tax that could radically increase miners' electricity costs.
However, the IMF's analysis has been criticized, notably by Bitcoin defender Daniel Batten. Let's examineboth sides of the coin.
Crypto & Data Centers to Contribute 3.5% of Global Electricity UseThe IMF report says crypto mining and data centers accounted for 2% of global electricity use in 2022.
IMF researchers Shafik Hebous and Nate Vernon-Lin anticipate this figure willrise to 3.5% over the next three years. To put this into perspective, this equals Japan's current demands - the fifth-largest energy consumer in the world.
According to the report, crypto mining could account for 0.8% of global electricity use and 0.7% of carbon emissions by 2027.
Factoring in data centers, they believe carbon emissions could hit 450M tons by 2027, accounting for 1.2% of the world's total.
IMF Tax Could Increase Crypto Miners'Electricity Costs By 85%In light of the research, the IMF has proposed increasing the electricity tax crypto miners and data centers pay.According to Hebous and Vernon, a direct tax of $0.047 per kilowatt hour would encourage the crypto-mining industry to reduce its emissions and bring them in line with international targets.
When also considering air pollution's health impacts, that rate could rise to $0.089, increasing miners' electricity costs by 85%.
They believe the tax could yield $5.2B in global annual revenueand slash emissions by 100M tons - the same level as Belgium's yearly emissions.
IMF Faces Backlash From Bitcoin AdvocateDaniel Batten (a renowned Bitcoin advocate) does not agree with their findings or solution. He says the report is poorly researched, uses outdated data, and makes inappropriate comparisons.
Rebuttal of New IMF report on Bitcoin mining emissions
IMF report says Carbon Emissions from AI and Cryto are surging" then goes on to a detailed report on how regulators should impose cryptocarbon" tax.
Rebuttal:
Firstly, Bitcion advocates everywhere should pause to... pic.twitter.com/GClHEi0FvR
- Daniel Batten (@DSBatten) August 15, 2024
To support his argument, he points to an extensive collection of articles that report how Bitcoin mining has a decarbonizing impact on energy grids.
Such examples show that many miners use renewable energy sources or surplus energy that would otherwise go to waste. He goes on to say that Bitcoin mining actually promotes innovation because of the constant need for cheaper electricity.
He also points to a graph showing that Bitcoin mining emissions have mostly stayed the same despite the increasing energy-intensiveness of mining.
On one side, we have the IMF's report, which highlights a serious issue. On the other hand, we have Bitcoin advocates who claim the report is inherently flawed. This serves as another example of the conflict surrounding the debate on crypto's environmental impact.
So, even though the IMF's report presents genuine concerns, it seems there is a need for more thorough research. The debate is far more nuanced, and more background is needed to provide fair and accurate information for policymakers.
Ultimately, this news shows the disputes surrounding crypto and environmental concerns are far from being solved.
References- Carbon Emissions from AI and Crypto Are Surging and Tax Policy Can Help (IMF)
- Science Hub (DARI)
- Bitcoin Mining for EU Electricity Grids: An Energy Supply Management Tool (Open Dialogue)
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