In a new academic paper, it was found that the bans on Bitcoin mining, especially in highly developed countries with vast renewable energy resources can lead to increased carbon leakage into the atmosphere. If you consider the climate change activists, banning Bitcoin mining will solve their problem. But, considering the results of a recent study, it will likely yield the opposite results and only end up making matters worse from a global perspective.
Bitcoin Mining Ban and Carbon Leakage
Researchers from Exponential Science and University College have conducted a research study about the Bitcoin mining ban and its aftereffects. In the paper titled “The Unintended Carbon Consequences of Bitcoin Mining Bans: A Paradox in Environmental Policy”, it was stated that banning Bitcoin mining, especially in places that are abundant with renewable resources can lead to severe consequences.
Normally, mining a block of Bitcoin requires a large amount of energy. It was claimed that restricting this mining model can ultimately lead to “carbon leakage”. Carbon leakage is the increase in greenhouse gas emissions in other countries when a region introduces climate policies to reduce GHG emissions at home. In the case of Bitcoin, this happens when a Bitcoin-producing company shifts its base to another country to escape the restriction put upon them by their former country.
Aftereffects of Shifting Bitcoin Mining Camps
As we discussed in the above section, when a country imposes strict policies on Bitcoin mining, normally the company shifts its base to another country. This can have a huge impact on the environment of the new base camp region. Here are some of the significant impacts.
- Greenhouse gas emissions: As we know, Bitcoin mining consumes a tremendous energy. This can result in severe carbon emissions.
- Water Usage: Bitcoin mining requires a tremendous amount of water for cooling purposes. This can seriously affect the water resources of a particular region, especially in arid and drought-prone regions.
- Land use: The land needed to produce a Bitcoin mining camp can be as large as a major city.
- E-waste: Bitcoin mining produces a lot of e-waste because the computers that are used to produce the coin normally have a short lifespan.
- Fossil fuel: About half of the electricity used for mining the coin is produced from fossil fuels. This is only going to eat into the limited supply of fossil fuels.
China to Kazakhstan Bitcoin Mining Immigration
The researchers used China’s Bitcoin ban in 2021 to solidify their argument regarding the Bitcoin mining ban. Before the prohibition, China was one of the major powerhouses involved in the creation of Bitcoin. It had one of the best Bitcoin mining hubs in the world. Cheap labor and electricity also played a major role in this.
After China enforced the ban on crypto mining, it created a panic among BTC and other crypto communities. They were worried that it was the beginning of the end of the crypto industry. But, the miners had other plans. They simply relocated to Kazakhstan, where electricity was way cheaper than China.
Soon, Kazakhstan became one of the hosts of the top crypto mining centers in the world. However, after this, the energy consumption in the area shot up rapidly, leading to frequent power outages and enormous carbon emissions. In simple words, the consequences became too dire.
Unexpected Consequences of Bitcoin Mining Ban
The research claims that the bans on Bitcoin mining put into effect in various low-emission countries could lead to an increase in global carbon emissions as mining operations relocate to regions having high carbon footprints. This is one of the major drawbacks of the above-said policies.
To overcome these challenges, the researchers have put forward many suggestions in their papers which we will look at in the coming sections. They also suggested that all Bitcoin mining is not the same, and to check the energy resources used in these mining camps before implementing regulatory policies.
Ways to Migitate the Bitcoin Mining Risks
In almost every case where there is a problem, the solution is not far away. You just have to look in the right direction. Luckily this time, the research paper provides us with several alternatives to prevent this carbon leakage to a great extent. Some of them are as follows:
- Incentivizing miners who use renewable energy sources.
- Encouraging miners to participate in mining in low-carbon producing regions.
- Taking various measures to prevent carbon leakage to a maximum extent.
- Promoting sustainable mining practices.
It was stated in the papers that adopting the above mechanisms can prevent carbon leakage to an extent.
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