You can ditch it. That is an electronic pickup of some sort. They typically read a magnet or a notch (or notches/gap) to determine crank position. On more modern cars, the computer has something similar that determines crank position, but that's not likely with yours.
Maybe a prior owner was trying out a crank-fired ignition but gave up?
Easiest way to get a tach on a gas engine is an alternator or ignition signal set to the number of cylinders, so I'm not sure why they'd try off the crank.
Good luck on finding that missing 47hp. You are missing more than double of what my 72 Fiat 500 makes on a good day!
