Cryptocarbon: How much is the corrective tax?

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 0.28% 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 damages, 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 0.085 per kWh. Country-specific estimates vary depending on their electricity sources. Other new electricity reliant technologies are also driving up CO₂ emissions. In our calculation, the corrective tax on electricity used by data centers is USD 0.048, on average.