Bitcoin mining ban could worsen carbon emissions, study finds

As the fight against climate change is at the heart of global concerns, some governments are considering banning Bitcoin mining, an energy-intensive process often criticized for its environmental impact. However, a new study led by the Exponential Science research group reveals a paradox that may surprise more than one legislator: banning Bitcoin mining could worsen carbon emissions, thus counteracting climate goals. This study, titled The Unexpected Carbon Consequences of Bitcoin Mining Bans: A Paradox in Environmental Policy, sheds further light on the potential displacement effects caused by these bans.

The paradoxical consequences of Bitcoin mining bans

According to researchers at Exponential Science, bans on Bitcoin mining can produce paradoxical effects and push miners to migrate to regions where energy is more carbon-intensive. “A ban in the United States or Europe could actually exacerbate global carbon emissions, as miners would move to countries that rely on fossil fuels,” explains Juan Ignacio Ibañez, a contributor to the study. To illustrate this situation, the study indicates that a mining ban in countries like Norway, which primarily uses renewable energy sources, would push miners to relocate to countries like Kazakhstan, where electricity is predominantly generated by coal-fired power plants.

The study also demonstrated that this displacement of miners could lead to a net increase in global emissions. According to their calculations, a mining ban in Europe could increase global emissions from the Bitcoin blockchain by several percentage points, as miners would turn to regions with less stringent ecological regulations. Conversely, a ban in a country like Kazakhstan, which heavily relies on fossil fuels, could significantly help reduce the carbon emissions associated with the Bitcoin network, with an estimated reduction of 7.63% in annual global emissions.

A disparate impact by region

The study’s findings also show that the impact of a ban can vary within the same country depending on the region. In the United States, for example, a mining ban in California, where renewable energy sources are significant, would have a detrimental impact and push miners to states where the energy mix is less green. On the other hand, a ban in states like Kentucky or Georgia, where dependence on coal is greater, could actually help reduce global emissions from the Bitcoin network, according to Exponential Science’s models.

An obvious example is China, where Bitcoin mining was officially banned in 2021. According to the researchers, this ban has indeed pushed some miners to continue their operations clandestinely, particularly in provinces like Xinjiang. However, if all mining activities were to cease in this province, it would result in a reduction of nearly 6.9% of global emissions. The researchers emphasize the need for regulation informed by scientific data to prevent overly broad bans from leading to outcomes contrary to climate goals.

In light of the climate emergency, this study by Exponential Science underscores the importance of a nuanced approach in mining regulation policies for Bitcoin. As Nikhil Vadgama, co-founder of Exponential Science, reminds us, “emerging technologies like blockchain are complex systems, and poorly designed bans can lead to butterfly effects with unintended consequences.” For governments, this means that it is not enough to ban energy-intensive activities like mining; it is also crucial to assess the displacement effects and environmental impacts that may arise.