IWF recommends massive electricity price increase: effects on the cryptoma market

IWF recommends massive electricity price increase: effects on the cryptoma market

The International Monetary Fund (IMF) recently pronounced a controversial recommendation to increase electricity costs for the crypto industry and artificial intelligence. This measure could have a significant impact on the dynamics of the crypto market and on global CO2 emissions.

recommendation for the drastic increase in electricity price

The IMF has suggested that the electricity costs for artificial intelligence and blockchain technologies increase by 85 %. According to the organization estimates, around 1.2 % of global CO2 emissions (around 450 million tons) will be attributed to these industries by 2027. A significant part of it, 0.7 %, would be eliminated on cryptomining. A new tax of $ 0.047 per kilowatt hour is proposed, which in the event of health concerns could even increase to $ 0.089.

literary relations in electricity consumption

contradictory views accompany the discussion about the proposed electricity price increase. Critics point out that the electricity consumption of Bitcoin mining is relatively low compared to other industries. For example, Bitcoin mining consumes about 24 % more electricity than the gold mining and is only a fraction of the consumption of countries such as China and Poland. The CO2 emissions of the Amazon company also exceeds that of Bitcoin.

consequences for the crypto industry and environmental policies

If electricity costs actually increase, cryptomining could become unprofall for many companies, which could make it shift to their activities to countries with lower electricity costs and less strict environmental regulations. This could cause a dangerous trend in which countries try to loosen their environmental protection measures to attract industry, which could have a long -term negative effects on global climate balance.

innovation engine or hurdle?

On the other hand, this new tax could create incentives for innovations that aim to use electricity more energy. Examples of this are the transition from proof-of-work to Proof-of-Stake or the development of more energy-efficient layer 2 solutions. Nevertheless, relocating the miners at locations with better conditions could also endanger the decentralization and safety of the blockchain, since fewer miner transactions can confirm and this can lead to higher transaction fees.

the political perspective on the energy question

The proposed measures are in a strong contrast to the plans of US presidential candidate Donald Trump, who supports increased use of fossil energies to promote cryptomining in the USA. While the IMF is aiming for sustainability, Trump seems to pursue a policy that makes the country cheap for miners, regardless of the environmental impact.

Developments related to this topic are of central importance, since they could not only influence the future of the crypto industry, but also the global discussions about sustainability and climate protection. The challenges that the industry is facing could also cause innovative solutions that increase efficiency and reduce CO2 emissions.