While 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 carried out by the Exponential Science research group reveals a paradox that could surprise more than one legislator: banning Bitcoin mining could worsen carbon emissions, and thus go against climate objectives. This study, entitled The Unintended Carbon Consequences of Bitcoin Mining Bans: A Paradox in Environmental Policysheds more light on the potential displacement effects caused by these bans.
The paradoxical consequences of Bitcoin mining bans
According to Exponential Science researchers, Bitcoin mining bans 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 overall carbon emissions, as miners would move to countries that rely on fossil fuels” explain Juan Ignacio Ibañez, contributor to the study. To illustrate this situation, the study indicates that a ban on mining in countries like Norway, which mainly uses renewable energy sources, would push miners to relocate to countries like Kazakhstan, where electricity is mainly generated by coal-fired power plants.
The study also demonstrated that this movement of miners could lead to a net increase in overall emissions. According to their calculations, a mining ban in Europe could increase overall emissions from the Bitcoin blockchain by several percentages, as miners would turn to regions with less strict environmental regulations. In contrast, a ban in a country like Kazakhstan, which relies heavily on fossil fuels, could help significantly reduce carbon emissions associated with the Bitcoin network, with an estimated 7.63% reduction in global annual emissions.
Disparate efficiency depending on the region
The study's findings also show that the impact of a ban can vary within countries depending on the region. In the United States, for example, a ban on mining in California, where renewable energy sources are important, 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 reliance on coal is greater, could actually help reduce overall emissions from the Bitcoin network, according to Exponential Science models.
An obvious example is China, where Bitcoin mining was officially banned in 2021. According to researchers, this ban has effectively pushed some miners to continue their operations clandestinely, particularly in provinces like Xinjiang. However, if all mining activities ceased in this province, it would result in a reduction of nearly 6.9% in global emissions. The researchers thus underline the need for regulation informed by scientific data to prevent overly broad bans from leading to results contrary to climate objectives.
Faced with the climate emergency, this Exponential Science study highlights the importance of a nuanced approach in Bitcoin mining regulation policies. As Nikhil Vadgama, co-founder of Exponential Science, points out, “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 such as mining; it is also necessary to assess the displacement effects and environmental impacts that may result from them.
Maximize your Tremplin.io experience with our 'Read to Earn' program! For every article you read, earn points and access exclusive rewards. Sign up now and start earning benefits.
