Bitcoin’s environmental impact is a hot topic, and regulatory policies aimed at reducing it are gaining traction. However, as detailed in the paper The Unintended Carbon Consequences of Bitcoin Mining Bans: A Paradox in Environmental Policy, such measures can sometimes lead to outcomes contrary to their intent.
This work explores how Bitcoin mining bans in low-carbon jurisdictions can result in increased global carbon emissions – a phenomenon referred to as "aggravated carbon leakage."
One of the study’s standout insights is that banning mining often leads to operations relocating to less regulated, carbon-intensive regions. The paper, authored by Juan Ignacio Ibañez, Aayush Ladda, Dr Paolo Tasca and Logan Aldred, explains how the mining ban imposed in China in 2021 has not benefited the environment:
‘Rather than curbing global Bitcoin mining, to a great extent, the ban merely displaced operations to nearby Kazakhstan, where regulatory environments were more lenient and electricity costs cheaper.’
This relocation has led to increased emissions in those new jurisdictions, exacerbating the global carbon footprint rather than mitigating it.
The findings include:
- Net Increase in Emissions: Mining bans in renewable-heavy nations like Canada can unintentionally increase global emissions by 2.5 million tonnes annually.
- Effective Bans: Conversely, bans in countries reliant on carbon-intensive energy sources, such as Kazakhstan, could lead to a reduction of 3.4 million tonnes of CO2 annually.
The authors stress the need for a more nuanced and strategic approach, noting:
‘Policymakers should reconsider the effectiveness of outright Bitcoin mining bans as a tool for reducing global carbon emissions, which could be counterproductive. Instead, alternative regulatory approaches could prove more effective…’
This study highlights the complexity of regulating decentralised technologies and the importance of data-driven solutions.
For deeper insights, access the full paper 👇.
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