Business and Economics > Natural Resource Extraction

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Mr. Shafik Hebous and Nate Vernon
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.
International Monetary Fund. Monetary and Capital Markets Department
This technical assistance report describes the regulation and supervision of crypto assets in Lao People’s Democratic Republic (LAO P.D.R.). Crypto uptake in Lao P.D.R. seems to be limited so far, and so consumer protection risks appear contained. The authorities are in the process of considering an appropriate regulatory and supervisory framework for mining and trading activities. The current regulatory framework for crypto trading platforms is a positive step to managing risks but would benefit from key prudential and conduct additions. Authorities should continue their efforts to coordinate domestically and cooperate with foreign peer regulators. Due to the novelty of the industry and the limited size of the Lao PDR market, the most prominent risks arising from crypto trading in the short term are likely to be generated by complex interconnections within crypto markets and broader financial markets. The mission commends the authorities in their coordinated approach to this new regime, and would like to encourage them to continue deepening that coordination.