IMF Warns: Crypto and AI Worsen Climate Crisis
A new report from the International Monetary Fund (IMF) highlights the rapidly growing environmental impact of cryptocurrency mining and artificial intelligence (AI), warning that these technologies could soon account for a significant share of global carbon emissions. Currently, crypto mining and data centers together consume about 2% of the world’s electricity, with this share projected to rise to 3.5% by 2027—equivalent to the current electricity consumption of Japan, the world’s fifth-largest energy user, according to Imf.
The IMF report estimates that by 2027, crypto mining alone could generate 0.7% of global carbon dioxide emissions, while combined emissions from crypto mining and data centers could reach 450 million tons, or 1.2% of the world total. The environmental impact of these activities has raised concerns, especially as the world struggles to meet climate targets.
To address these growing emissions, the IMF suggests implementing targeted tax policies. For the crypto mining industry, the IMF proposes a tax of $0.047 per kilowatt-hour, which could push the industry to adopt more energy-efficient practices. This tax could be increased to $0.089 per kilowatt-hour when considering the local health impacts of air pollution, potentially raising $5.2 billion annually in global revenue while reducing emissions by 100 million tons—roughly equivalent to Belgium’s current emissions.
Data centers, which generally rely on greener electricity sources, could face a slightly lower tax rate of $0.032 per kilowatt-hour, or $0.052 when accounting for air pollution. This could generate up to $18 billion annually. Despite their growing environmental footprint, many data centers and crypto miners currently benefit from generous tax incentives, which the IMF suggests re-evaluating in light of their limited contribution to employment and significant environmental costs.
The IMF also advocates for broader carbon pricing, coordinated internationally, to more effectively curb emissions and encourage cleaner energy sources. In the absence of a global carbon price, the IMF emphasizes the importance of targeted measures, such as electricity taxes combined with credits for zero-emission energy use, to mitigate the climate impact of these energy-intensive industries.
As the window for containing global temperature rises rapidly narrows, the IMF’s report underscores the urgency of expanding renewable energy sources and adopting appropriate tax policies to manage the environmental impact of crypto mining and AI.
