The Carbon Paradox: Why Banning Bitcoin Mining Can Increase Global Emissions Following yesterday's post on how Bitcoin prohibition fails, research from 2024 by Juan Ignacio Ibañez, Paolo Tasca, Aayush Ladda, and Logan Alred from Exponential Science and University College London reveals another unintended consequence. Based on their model: Bitcoin mining bans in clean-energy countries would actually increase global carbon emissions and not decrease them as it may be the intention by policymakers. The Environmental Backfire By modeling mining bans across various countries the authors find a fundamental paradox in their simulations: Clean energy bans would increase emissions: - Canada ban: +2.5 million tonnes CO2 annually - EU-wide ban: +523,000 tonnes - Norway ban: +576,000 tonnes - Paraguay ban: +1.9 million tonnes Only dirty grids would benefit from bans: - Kazakhstan ban: -3.4 million tonnes - China's Xinjiang: -3.1 million tonnes - Malaysia: -997,000 tonnes The Mechanism The paper identifies this as "aggravated carbon leakage." According to the authors’ model, when clean jurisdictions ban mining, operations don't disappear, they relocate to dirtier energy grids, resulting in a net increase in global carbon emissions. U.S. State Complexity The paradox appears at state level too: - Kentucky ban would reduce emissions (-2.64M tonnes) - But New York (+1.5M tonnes) and Texas (+1M tonnes) bans would increase them Net U.S. ban effect in simulations: +287,000 tonnes annually Why This Happens Bitcoin's properties confound traditional regulation: - Mining is mobile: Equipment ships globally within weeks - Zero-sum game: Bitcoin rewards stay constant: less mining in one place means more profit elsewhere - Permissionless: Mining operates anywhere with electricity and internet Policy Implications - The authors conclude unilateral bans are counterproductive under modeled scenarios. Instead, they suggest: - Incentivize renewable energy in high-carbon jurisdictions - Attract mining to clean-energy regions through incentives - Coordinate internationally rather than ban locally Combined with yesterday's findings on market segmentation, a pattern emerges: traditional regulatory approaches fail when applied to decentralized systems. Countries considering mining bans face an uncomfortable truth: Their environmental policies may worsen the problem they're trying to "solve". TL;DR: In the authors’ simulations, mining bans in clean-energy nations would increase global CO2 by millions of tonnes annually. Mining doesn't stop, it moves to dirtier grids. Another case where prohibition creates the opposite of its intended effect.(Dr. Jan Wüstenfeld)