Bitcoin Mining Bans Can Backfire on Climate Conscious Governments, a New Research Finds

Governments
looking
to
ban
bitcoin

(BTC)
mining
for
environmental
reasons
should
think
twice
—
it
could
backfire.

That’s
the
conclusion
from
a
new
academic
paper
by
crypto
research
firm
Exponential
Science,

published
on
Thursday
and
titled
‘The
Unintended
Carbon
Consequences
of
Bitcoin
Mining
Bans:
A
Paradox
in
Environmental
Policy.’

The
paper’s
findings?
In
some
jurisdictions,
a
blanket
bitcoin
mining
ban
can
actually
trigger
an
increase
in
the
industry’s
overall
carbon
emissions,
as
the
affected
miners
may
relocate
to
new
regions
with
electric
grids
that
rely
on
fossil
fuels.

“Bitcoin
mining
has
seen
a
rough
couple
of
years
from
a
PR
perspective,
with
respect
to
its
environmental
credentials,”
Juan
Ignacio
Ibañez,
one
of
the
paper’s
contributors,
told
CoinDesk.

“Although
it
is
true
that
proof
of
work
mining
is
an
energy-intensive
activity,
this
does
not
directly
translate
into
carbon
emissions
or
environmental
harm.”

Indeed,
it
all
depends
on
what
the
source
of
energy
is.
A
coal-powered
electric
grid
will
obviously
produce
more
carbon
emissions
than
a
hydro-powered
one.
And
mining
bans
“can
have
the
unfortunate
effect
of
driving
the
industry
away
from
green
sources
of
energy,
hence
increasing
the
global
emissions
from
the
network,”
Ibañez
said.

It
really
depends
on
the
region.
According
to
the
team’s
model,
a
mining
ban
in
Kazakhstan,
for
example,
would
reduce
the
Bitcoin
network’s
global
annual
carbon
emissions
by
7.63%.
The
same
ban
in
Paraguay,
however,
would
increase
emissions
by
4.32%.

Overall,
mining
bans
would
be
more
effective,
from
an
environmental
perspective,
in
countries
such
as
China,
Russia,
and
Malaysia,
with
Kazakhstan
taking
the
lead
in
that
category.
They
will
backfire,
however,
in
most
of
the
Americas
and
in
Europe,
with
a
special
emphasis
on
Nordic
countries
and
Canada.

But
even
within
the
same
nation,
the
situation
may
vary
from
region
to
region.
In
the
U.S.,
for
example,
a
mining
ban
in
Kentucky
or
Georgia
would
likely
have
a
positive
impact
in
terms
of
emissions,
while
bans
in
New
York,
Texas,
the
state
of
Washington,
and
California
would
be
detrimental.

Interestingly,
a
similar
dynamic
is
playing
out
in
China.
The
Chinese
government
famously
banned
crypto
mining
in
2021,
but
mining
models
now
agree
that
some
Chinese
miners,
instead
of
relocating,
simply
went
underground
and
continued
to
operate
illegally.

The
result?
The
cessation
of
all
mining
activity
in
the
province
of
Xinjiang
could
still
result
in
a
6.9%
reduction
in
global
annual
emissions,
while
a
similar
move
in
Sichuan
would
cause
almost
a
3.8%
increase.

“What
this
underscores
is
the
importance
of
science-informed
regulation,”
Nikhil
Vadgama,
co-founder
of
Exponential
Science,
told
CoinDesk.
“Emerging
technologies
such
as
blockchain
are
complex
systems,
and
thus
regulatory
interventions
can
produce
a
butterfly
effect”
—
meaning
policy
decisions
can
have
unintended,
far-reaching
consequences.

For
Ibañez,
one
of
the
takeaways
of
the
research
is
that,
as
an
increasing
number
of
bitcoin
mining
operations
come
online,
new
jurisdictions
will
grow
to
have
an
outsized
impact
on
the
network’s
total
carbon
emissions.

“Currently,
our
model
does
not
place
a
large
effect
on
Sweden,
but
it’s
a
safe
bet
to
think
that
more
and
more
miners
may
move
there
if
conditions
continue
to
be
so
favorable.
Other
countries
such
as
Iceland
and
potentially
Argentina
could
enter
the
radar
soon,”
Ibañez
said.