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In summary
- Banning Bitcoin Mining in countries with renewable energy, such as Canada, could increase global CO2 emissions.
- According to the study, a ban in Canada could increase emissions by 5.6%, adding 2.5 million tons of CO2.
- The authors suggest incentivizing renewable energy mining in high-carbon countries rather than enforcing bans.
A new research paper has argued that Bitcoin mining bans could have the unintended consequence of actually increasing global carbon emissions in some cases.
The paper argued that banning Bitcoin mining in areas that use a comparatively high amount of renewable energy, such as Canada, Norway or El Salvador, would encourage Bitcoin mining to grow in countries more dependent on fossil fuels such as Kazakhstan, Russia or China.
The working paper was produced by researchers from non-profit Blockchain research group Exponential Science, along with researchers linked to University College London. And it hasn’t been peer reviewed.
Proof-of-Work blockchains like Bitcoin rely on computers running a series of energy-intensive calculations, a process called mining, which can often use fossil fuels for energy.
As a result, many activists in different parts of the world have called for bans on Bitcoin mining, in order to reduce fossil fuel consumption and greenhouse gas emissions.
A ban on Bitcoin mining in Canada would have the largest negative impact on any country, if the report is correct.
The document claimed that banning mining in the country could cause global mining emissions to increase by 5.6%, releasing an additional 2.5 million tonnes of CO2 into the atmosphere.
Canada is one of the largest Bitcoin miners in the world, according to The Cambridge Center of Alternative Finance, and is also a leader in renewable energy, accounting for more than 17% of the country’s total energy supply.
By comparison, researchers estimated that a US-wide ban would cause a 0.64% increase and release an additional 287,000 tons of greenhouse gases into the atmosphere, but they argue that the environmental impact of mining differs considerably depending on which state. be analyzed.
According to the researchers, a ban implemented in states highly dependent on fossil fuels such as Kentucky or Georgia could help reduce emissions, but a ban in states with abundant renewable energy such as New York would have the opposite effect. Meanwhile, the document claimed that an EU-wide ban would release an additional 523,000 tonnes of greenhouse gases into the atmosphere.
The paper worked under the assumption that miners would look to continue operations elsewhere and also move to countries with low energy costs, such as Kazakhstan or Malaysia, to remain profitable.
This is not to say that banning mining in some countries would not be beneficial in terms of reducing emissions.
The paper found that a ban in Kazakhstan would reduce grid emissions by approximately 7.6%, resulting in a decrease of 3.4 million tonnes of CO2 annually.
“Alternative regulatory approaches”
The paper’s authors suggested that “alternative regulatory approaches may prove more effective” than bans.
These could include “incentivizing the use of renewable energy for mining operations in high-carbon jurisdictions, and attracting bitcoin mining operations to low-carbon jurisdictions through tax breaks and other benefits.”
But the Bitcoin mining industry’s harshest critics are unlikely to back down anytime soon.
In March 2024, US nonprofit Greenpeace US released a devastating report on the industry, alleging it had “deep ties” to the fossil fuel industry and “right-wing climate change deniers.”
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