Cryptocarbon: How Much Is the Corrective Tax?
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Summary:
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.
Series:
Working Paper No. 2023/194
Subject:
Carbon tax Commodities Economic sectors Electricity Environment Greenhouse gas emissions Mining sector Taxes Technology Virtual currencies
Frequency:
regular
English
Publication Date:
September 15, 2023
ISBN/ISSN:
9798400256080/1018-5941
Stock No:
WPIEA2023194
Format:
Paper
Pages:
32
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