Abstract

As Bitcoin continues to rise in popularity, so do interests in its mining process. However, as the price continues to climb, it becomes harder to mine Bitcoin as the computational math problems needed to create one increase significantly, requiring more advanced hardware requirements. As the hardware necessary to complete the mining process becomes more advanced, the energy required to power increases alongside it. Whereas the energy required to mine Bitcoin would have been insignificant to greater society a decade ago, the Bitcoins industry's present-day power consumption can rival countries like Sweden or Malaysia. Along with rivaling countries in their power consumption, the Bitcoin industry has begun to rival many moderately sized countries in their Carbon emissions, releasing megatons into the atmosphere every year. With the Bitcoin industry consuming so much power and emitting an equally significant amount of carbon, they have come into conflict with different countries that have introduced regulations around the industry to fit their individual goals. These conflicts have, in turn, created questions on where the Bitcoin industry can best flurish. While that remains unclear, certain factors such as cheap energy, minimal legal hurdles, and regulation will undoubtedly play a factor in the process. With the debate over how to best regulate the growing problem of Bitcoins Carbon emissions, different solutions have been proposed. Since the topic has become more mainstream, proponents and opponents of the Bitcoin industry have put forward various forms of regulation or lack thereof that can best protect the environment while also allowing the proposed benefits of Bitcoin to come to fruition. 

Bitcoin, Cryptocurrency, and Blockchain

Bitcoin and other forms of cryptocurrency are linked together through a system called blockchain, which allows for the buying and selling of cryptocurrencies, most notably Bitcoin, through a decentralized system free from intervention. Blockchain is typically defined as a database or ledger that contains records known as blocks. These blocks contain a timestamp and transaction data that differ depending on transaction type (Coinbase, 2021). The timestamp is predominantly included with the other information to prove that the data existed when the transaction occurred and the block was created. The constant addition of blocks containing information on the previous one form a chain, creating the “blockchain” (Coinbase, 2021). Each added block is set in stone, and once it is added to the ledger, it cannot be removed from the chain. Blockchains use a peer-to-peer computer network that allows for its decentralized nature. For blockchain, several computers need to be documenting the creation of new blocks and recording previous transactions. In the case of blockchain and unlike most other databases, a typical blockchain’s computers are mostly all in separate locations (Coinbase, 2021). Instead of having one data server that is run in a specific place by one specific entity, each computer is run by distinct people or groups in different locations. These operators are known as nodes. Through this system of nodes, blockchains can achieve decentralization (The Economist, 2015). The nodes also have a full history of all the transactions that have taken place in a specific blockchain and, if an error occurs for one node, it can cross-reference the information of thousands of other nodes. This way, no single node working in the blockchain can alter the information within, leaving the system decentralized and making the information present in the blockchain irreversible (The Economist, 2015). If a user were to tamper with the blockchain’s information nodes, they would be able to use their transaction history to locate the node with the incorrect information and establish the correct and transparent transaction history (The Economist, 2015). Blockchain as a system was invented to work along cryptocurrencies, specifically Bitcoin. Its predominant use today is as a ledger for cryptocurrency transactions; however, it is not exclusively limited to this, as legal contracts, individual companies’ inventories, and more can be housed on a blockchain database.

Blockchain as a system was first developed to work alongside Bitcoin so that Bitcoin could be bought, sold, and traded in a decentralized manner (Coinbase, 2021). To understand Bitcoin, it is first important to understand what a cryptocurrency is. Cryptocurrency is defined as a digital asset, coin, or token based on cryptography. Cryptocurrencies are designed to be mediums of exchange that are stored in computerized databases containing public ledgers of transactions (blockchain). The blocks that are continually added to a blockchain usually contain information on a cryptocurrency transaction. The validity of each individual cryptocurrency is proven through details in its respective block on the blockchain. Cryptocurrencies are not typically issued by any central authority or bank and maintain their destabilization using blockchain technology (Coinbase, 2021). Recently, however, countries and corporations have started issuing their own digital currencies. Both China and Facebook have begun experimenting with digital currencies that would be some of the first digital currencies distributed by a central authority.

The first cryptocurrency and the reason for blockchain’s creation is Bitcoin. Like many other cryptocurrencies, Bitcoin is a decentralized digital currency that operates through a blockchain system. Bitcoin, like many other cryptocurrencies, has a system of nodes (or in Bitcoin’s case, miners) who verify all Bitcoin transactions and record them in the blockchain (Yellin, 2013). The process for acquiring Bitcoin is known as mining, which involves high-powered computers completing highly complex math algorithms. The problems require the most advanced hardware, as they are impossible to complete by hand and cannot be solved by most computers. Miners are rewarded for their services as blockchain auditors and are responsible for verifying the validity of all Bitcoin transactions. Mining is also the process that creates more Bitcoin or, in other words, brings more Bitcoin to the surface as, just as any other material that is mined for in a particular area has a limited supply (Hong, 2021).

Energy Use: How Mining Creates Electronic Waste

How Mining Affects the Environment

As discussed previously, mining is the process of high-powered computers solving extremely complex math problems that become progressively more difficult. Mining has two primary purposes: to verify Bitcoin transactions and, more importantly, to create new Bitcoin. Just like mining for diamonds or gold, the further down one mines the greater the investment becomes. Just like mining for valuable materials as well the more advanced the machines must be the more one mines. This same principle applies to mining Bitcoin because it has a finite supply. As miners dig deeper, the computational math problems and the hardware requirements needed to solve them both become more advanced.

The Bitcoin mining structure and its increasing difficulty have led to environmental concerns and have brought into question the allegedly groundbreaking future uses of Bitcoin and similar cryptocurrencies. Although Bitcoin mining could be performed by relatively common computers at first, the computational requirements for the current hardware is so large that full warehouses are needed to house mining rigs, and the energy that is needed to power them is staggering. A few years ago, studies estimated that the worldwide Bitcoin mining operations consumed more energy than the nation of Argentina (Criddle, 2021), but newer estimates place them as consuming more energy than countries such as Malaysia and Sweden (Cambridge Bitcoin Energy Consumption Index, 2021). One Bitcoin transaction takes an estimated 1,544 kWh of energy, which is enough to power the average American household for 53 days (Digiconomist Bitcoin Energy Index, 2021). To further put into perspective how much energy Bitcoin mining uses, it is important to understand the hardware that Bitcoin miners use. Bitcoin miners require graphics cards (GPUs), preferably the newest Nvidia or AMD models, and sometimes require thousands of them to power rigs in mining centers. Three GPUs can consume approximately 1,000 watts of power or the same as a medium-sized window air-conditioning (AC) unit. With that in perspective, imagine the energy needed to power mining centers with 50,000 GPUs all running nonstop (Baker, 2020). It is not only Bitcoin mining power consumption that affects the environment but also the amount of AC needed to run a mining rig efficiently. Although it used to be that a simple fan in a desktop computer could efficiently cool a mining rig, as mining has become more difficult and the hardware required more advanced, stopping a mining rig from overheating often requires a warehouse of AC units.

Data and Energy Comparisons: Emissions Per Bitcoin

The immense amount of energy that the Bitcoin industry consumes creates massive amounts of carbon emissions and electronic waste that have been responsible for a rise in pollution over the last few years. Although not all the energy consumed by Bitcoin mining is powered by fossil fuels, most researchers estimate that fossil fuels account for 39%–73% of the power consumed by the industry (Clifford, 2021). This is because fossil fuels are often cheaper and more accessible than renewable energy; however, Bitcoin is one of the industries that uses the most renewable energy in the world. Many of the world’s largest corporations have long been criticized for the energy that their data centers consume. The worldwide energy consumption of all these data centers, excluding those of Bitcoin, is around 1%. Bitcoin alone makes up 0.5% of the energy consumed worldwide, a large majority of that energy usage is fossil fuels (Lohr, 2021). So while the Bitcoin industry is making progress in renewable energy their past and present reliance on fossil fuels has midgiated it. It als important to understand that technological advancements such as cloud data servers have allowed many corporations to reduce their energy consumption; however, the structure of Bitcoin’s mining system makes it increasingly difficult to reduce its energy consumption (Lohr, 2021). With the amount of energy it takes to mine Bitcoin and successfully use it, the industry has built itself an impressive carbon footprint of around 36.95 megatons of CO2 (Browne, 2021).

In addition to Bitcoin’s significant carbon emissions, the industry also creates large amounts of electronic waste every year. Bitcoin’s electronic waste output stems from its need for large amounts of hardware, specifically GPUs and its constant need to replace them with newer, more efficient models. The life of one GPU in a mining rig is around 1.5 years before a replacement is needed, as continuously increasing energy costs and the release of more efficient GPUs onto the market cause the ones already in use to be discarded. Putting this into perspective with the fact that some mining centers contain thousands of GPUs that will at some point be disposed of, it becomes clear that Bitcoin’s carbon emissions are not it's only environmental problem. A shift to renewable energy may not solve all of Bitcoin’s environmental concerns (Digiconomist, 2021).

How Mining Operations Relate to “The Race to the Bottom”

As previously mentioned, the negative environmental impacts of Bitcoin mining are the consequence of three factors: the excessive energy that mining requires, the AC required to allow mining hardware to constantly operate, and the creation of electronic waste as Bitcoin continually replaces old hardware with new, more advanced hardware. The decentralized nature of the Bitcoin industry means that if miners have all the necessary hardware, they can set up rigs anywhere, allowing them to pick and choose locations that best fit their interests. This decentralization is vital for the industry for several reasons, most importantly of which is that it allows miners to choose locations with the cheapest energy prices to cut the cost of the excessive energy consumption where they can. This race to the lowest possible energy costs has led the Bitcoin industry to significantly increase its carbon emissions and the ban of Bitcoin mining in some countries along with their mining operations.

The desire to reduce energy costs is shared by many in the Bitcoin industry and has led many miners to move their operations to different countries in the hope of finding cheaper energy. For a long time, this led miners to China, where the provinces of Sichuan, Yunnan, Xinjiang, and Inner Mongolia served as hot spots for a majority of the world’s Bitcoin miners; it is believed that 65%–75% of all Bitcoin mining happened in China until the country’s recent ban of the industry (Sigalos, 2021). These four provinces had some of the best and cheapest energy available to the Bitcoin industry as well as different kinds of energy such as hydropower, which Sichuan and Yunnan offered. At the same time, Xinjiang and Inner Mongolia served as hot spots for coal power (Sigalos, 2021). The tendency, however, for Bitcoin miners to position themselves within these regions and China has caused concern over the environmental impact and sent the entire Bitcoin industry into turmoil. China’s heavy reliance on coal energy has caused severe environmental concern in the face of the large Bitcoin operations in the country. Out of all energy sources and fossil fuels, coal is the worst for the environment and contributes the most to climate change. Being aware of Bitcoin’s excessive energy use puts into perspective how devastating many of the mining operations in China were for the environment (Sigalos, 2021). The effects of coal-powered mining operations were so prevalent that Inner Mongolia failed to meet its climate reduction goals, citing mining as the problem and banning the practice in the region. The effects of Bitcoin mining may not just be limited to Inner Mongolia, as the nation of China itself has struggled to meet its climate goals, leading to numerous other crackdowns on Bitcoin mining in different regions of China.

China is not the only country to take action against Bitcoin miners, as more and more countries are beginning to join them. One of these countries is Iran, who, in the wake of rolling blackouts and increased pollution, cracked down on Bitcoin mining in the country. Cryptocurrencies have been a valuable resource to Iran because they allow the country to bypass certain economic sanctions (Karimi, 2021). Given the nation’s economic situation and their cheap energy, the country has attracted many ambitious miners, though nowhere near at the level of China (Karimi, 2021). Although it is not known whether the blackouts felt across Iran’s capital, Tehran, were caused by Bitcoin miners or if the government was just using them as a scapegoat, it did lead the government to put a ban on mining until late September. Government crackdowns on Bitcoin miners, their continued consumption of large amounts of electricity, and their significant carbon emissions have led miners to leave in search of new sources of cheap energy.

With countries, most importantly China, cracking down on existing Bitcoin operations, many established miners are now looking for new cheap energy opportunities around the world in hopes of once again being able to set up mining rigs. The exodus caused by the Chinese government’s crackdown on Bitcoin has led over half the world’s miners to look to settle in central Asia, Eastern Europe, the United States, and Canada. One such place is Kazakhstan (Sigalos, 2021). The country has abundant power in the form of coal and an indifference toward the construction of mining rigs. It would allow them to set up new rigs quickly and efficiently without having to worry about significant buffer time between their exit from China and reemergence in another country (Sigalos, 2021). Mining in Kazakhstan still presents the same long-term environmental problems that the Bitcoin industry created in its search for a cheap source of energy. Currently, with the situation constantly developing, it is unclear whether Kazakhstan will be a temporary stop between China and countries further west or whether it will become a permanent hotspot for miners (Sigalos, 2021).

Another location that exiled miners are looking to for cheap energy is Texas (Sigalos, 2021). Texas has some of the cheapest energy in the world through their independent power grid. In addition, the state’s pro-crypto policies have made it a perfect spot for prospective miners to reestablish themselves. Since 2019, 20% of Texas’s energy has been renewable, making miners’ move to Texas more environmentally friendly than a move to a country such as Kazakhstan as 87% of the energy is derived from fossil fuels(Sigalos, 2021). However, there are certain factors that may make moving to Texas less advantageous than first believed. For example, in the beginning of 2021, the Texas power grid proved to be unreliable when winter storms led to prolonged power outages across much of the state. These storms led many people to call for Texas to winter-proof its system, which has proved to be a costly endeavor that would create new taxes and fees for those trying to tap into the state’s cheap energy (Sigalos, 2021). In light of the unreliability of Texas’s energy with possible extra fees, as well as the difficulty that comes with trying to set up rigs in the United States due to legal hurdles and stricter regulation around construction, it is still unclear where many of the Bitcoins leaving China will go in their search for clean energy.

What Regulations Have Been and Can Be Put Into Place?

Given the considerable amount of energy that Bitcoin consumes, the carbon it produces, and its equally significant carbon emissions, governments have proposed and put into place environmental regulations for the cryptocurrency. Many of the regulations that have been put in place have simply consisted of countries banning the practice of mining across the whole nation or in certain regions. The two examples previously mentioned, China and Iran, have both banned mining in their country in some form. Certain Chinese prefectures have taken significant action to remove Bitcoin mining operations from the country, while the government itself is beginning to take national actions against Bitcoin miners (Sigalos, 2021). Iran’s actions were more direct, as they quickly put a temporary nationwide ban on all Bitcoin mining in the country (Karimi, 2021).

Banning mining outright within a country is not the only method for reducing Bitcoin’s carbon emissions. One of the ways is through making blockchain technology more environmentally sustainable. Nonprofit groups such as Blockchain for Climate have proposed the idea of carbon trading in which other countries or corporations buy Bitcoin’s carbon emissions, allowing those entities to emit more carbon and take credit for their emissions (Tabuchi, 2021). In this way, the Bitcoin industry could put the money they made from selling their emissions to more environmentally friendly ways of mining Bitcoin or simply invest it in renewable energy. Another solution that has been proposed would be a transition from a proof-of-work system to a proof-of-stake system (Tabuchi, 2021). The proof-of-work system is a large part of the Bitcoin industry’s significant energy consumption. It was created to keep Bitcoin and, later, other cryptocurrencies decentralized. Through the proof-of-work system, miners compete to create new blocks. Miners compete over whose computers can solve the most cryptographic puzzles and make their computers complete upwards of 160 quintillion attempts a second (Tabuchi, 2021). This keeps the computers running at top speed all the time and leads to large energy consumption. Critics have called for Bitcoin to adopt the proof-of-stake system instead. The proof-of-stake system differs from proof-of-work because instead of making miners compete to create new blocks, it rewards miners with the most blocks already created based on how much of the currency they already own (Tabuchi, 2021). Many other cryptocurrencies have switched or are planning to switch to a proof-of-stake system, most notably Ethereum, which has found success as the world’s second-largest cryptocurrency and is currently making the transition to proof-of-stake. Other cryptos such as Teraz and Near Protocol have switched to proof-of-stake and have seen significant drops in their emissions (Tabuchi, 2021).

Policy Brief

With the ever-imposing effects of climate change becoming more apparent, action must be taken against Bitcoin to limit its massive consumption of energy. Due to the nature of blockchain and its possible benefits, several different forms of regulation have been proposed on how best to deal with the industry’s significant carbon emissions, ranging from strict bans to simply allowing the Bitcoin industry to continue on its current course with no repercussions. As in many of similar debates, the best possible solution lies somewhere between two extremes.

One proposed solution to the Bitcoin industry’s significant carbon output is an outright ban of mining. A total ban of Bitcoin is extremely unlikely and would require that each country bans the industry individually. Countries such as China have implemented bans because they have not been able to meet their climate goals. By directly banning the practice of Bitcoin mining, on paper, they are able to significantly reduce their carbon emissions and can subsequently conserve more power. However, banning Bitcoin in a country could cause a large group of its people to lose money. A ban in a country like China could significantly lower the price or people could just simply lose access to their Bitcoin. A ban on mining would cause those invested in Bitcoin to lose a significantly larger amount of money than those invested in other cryptocurrencies who would most likely see significant gains in their investments. 

Besides losing investors a significant amount of money, an outright ban would also push Bitcoin underground. Illegal mining operations are not new and exist around the world. Bitcoin’s decentralized nature, which makes it relatively hard to track, has always led to concerns about its use in funding illegal activities. By forcing Bitcoin underground, Bitcoin mining would simply be adopted as another criminal racket. Many proponents of blockchain and Bitcoin are strong believers in small government, or in some cases, anarchical political ideologies, and would not recognize a government’s power in attempting to ban the mining of Bitcoin. So, although an outright ban of Bitcoin could decrease some of the carbon emissions the industry creates, it would cause many investors to abruptly lose a significant amount of money while investors in other currencies become richer and transform Bitcoin mining into a criminal racket.

The opposite extreme to an outright ban of Bitcoin would be a policy of inaction. By allowing Bitcoin to continue to consume vast amounts of energy and emit carbon, it may force the industry to create a more sustainable network out of necessity. Another way that leaving the Bitcoin industry unregulated could help quell the cryptocurrency’s carbon emissions would be by allowing the Bitcoin bubble to burst.

Bitcoin is a volatile asset. In 2021, it saw significant price drops and increases. For example, after recognizing the very real threat that Bitcoin posed to the environment and the Paris Climate Accords, Elon Musk stopped accepting Bitcoin as a form of payment for Tesla products. This decision ultimately accounted for a large drop in price, which saw a single Bitcoin fall from $63,600 to $33,340 USD in mid-April. It is possible that allowing Bitcoin to continue its current trend would eventually lead to more price drops for several reasons, such as bans or other notable figures like Elon Musk speaking out against it, causing the price to fall to an all-time low, leading more and more people away from the currency. Although there are potential benefits to keeping the Bitcoin industry unregulated, most of them are speculative and do not guarantee a reduction in the Bitcoin industry’s carbon emissions. Allowing Bitcoin’s miners to continue unregulated could be just as disastrous as completely banning the practice. It would continue to allow significant amounts of power to be depleted across the world while letting increasing amounts of carbon into the atmosphere. As of right now, Bitcoins supporters swear by the possible benefits it could have in the future, however, provide little feedback on how best to tackle their industry’s growing emission problem, some going so far as to denying its existence in the first place. With most of Bitcoin's benefits being predictions for the future it's important that something be done abouts it current carbon emissions as its positive effect on society as of now do not warrant its carbon output.

A third option that could effectively limit the Bitcoin industry’s carbon emissions would be to find a middle ground. This would allow for the Bitcoin industry to continue mining operations in a more environmentally sustainable way. A force switched to a proof-of-stake system would be one of the best ways to allow Bitcoin to continue mining operations while mitigating its environmental impacts. Many of the world’s largest cryptocurrencies have made a switch to proof-of-stake and have seen significant decrease in their carbon emissions, and other notable currencies such as Ethereum have made plans to transfer to proof-of-stake. Although it would be nearly impossible to force Bitcoin to move to a proof-of-stake system because it is widely unpopular within the Bitcoin community, the switch could lead more and more investors to move to more sustainable cryptocurrencies.

Along with more sustainable cryptocurrencies overshadowing Bitcoin in the future, a better and more reasonable option would be for governments to create their own cryptocurrencies. Over the past few years, different countries have expressed interest or begun efforts to create their own cryptocurrencies. For example, China has begun experimenting with government-issued digital currencies, with over 21 million Chinese citizens participating in the trials. Smaller countries such as the Bahamas have already found success with their Sand Dollar. In addition, the United States Federal Reserve has expressed interest in starting their own digital currency. With China finding success with their digital Yuan, which could threaten the U.S. Dollar, it is possible that the Federal Reserve will step up its efforts in creating a viable digital currency. With government-created digital currencies becoming more common, it is very possible they could eclipse Bitcoin as the world’s dominant digital currency because they provide many of the benefits that investors in Bitcoin have sought. At the same time, they do not require large amounts of power to effectively use and obtain them and have produced nowhere near Bitcoin’s level of emissions as they do not need to be mined like other cryptocurrencies. As it stands, however, there are no digital government currencies large enough to effectively challenge Bitcoin’s dominance or help limit its carbon emissions. Another option would be to require self-reporting for cryptocurrencies such as Bitcoin, which could allow the United States government to more effectively tax investors. One way these taxes could be efficiently used to mitigate the environmental effects of Bitcoin mining would be to use the tax revenue to invest in renewable energy or projects that cancel out the effects of mining. Another method would be to only accept Bitcoin that was mined using renewable energy. In this way, Bitcoin’s miners who use clean energy can continue their operations, whereas miners who use fossil fuels will have more difficulty using Bitcoin.

Although finding a middle ground between the two extremes offers the most positive solutions, it also has many downsides. For example, the idea that Bitcoin would move to a proof-of-stake system is highly unlikely because, as mentioned before, the system is vastly unpopular within the community. It would be nearly impossible to get the entire industry to switch. There are also no guarantees that enough people will move away from Bitcoin to more sustainable cryptocurrencies without considering other factors (e.g., that figures such as Elon Musk will speak out against it). Perhaps most importantly, few governments have a solid road map for developing a digital currency. Although countries such as the Bahamas have found success with a government-regulated digital currency, the Bahamas is a very small country, meaning their success is no guarantee that a country as big as the United States can efficiently create a digital currency. As it stands, a digital currency capable of eclipsing Bitcoin’s presence on the world stage is, at best, a few years away.

Considering all the clear options for best dealing with Bitcoin’s effect on the climate crisis, the best course of action would be to find a middle ground between the two extremes. An outright ban on Bitcoin would create mass confusion within the market and would slow down mining and trading but not completely. The most important reason that a complete ban on Bitcoin mining is not the best way forward is because it creates new criminal activity around mining. Illegal mining operations have been found all over the world after a country instituted a ban on any cryptocurrency like China’s, which in some cases resulted in violence.

The other extreme course of action would be to allow the Bitcoin industry to maintain its current trajectory. This course of action would most likely be the least beneficial of all because it allows for the Bitcoin industry to continue consuming a significant amount of electricity and emitting a dangerous amount of carbon worldwide. Bitcoin accounts for a very small number of transactions every year. Allowing it to grow at its current rate without regulation will severely hurt the environment in the future. With the overwhelming negatives of both allowing Bitcoin to continue its current course without regulation and simply banning the practice of mining, the best course of action to protect the environment, secure people’s financial standings, and prevent criminal activity is creating a middle ground where Bitcoin can continue its current practices with moderate regulations. An ideal scenario would be to force the Bitcoin industry to change its network from an energy-inefficient proof-of-work system to a more sustainable proof-of-stake model. As previously mentioned, many other cryptocurrencies have significantly decreased their emissions by shifting to a proof-of-stake system. Furthermore, to find a middle ground, it is imperative that only Bitcoin mined with clean energy be accepted for any sort of transaction and that cryptocurrency investors be required to report their assets to the IRS. This requirement would allow the federal government to tax Bitcoin, the revenues of which they could use to offset the effects of mining and invest in renewable energy.

One of the most important steps to creating a middle ground would be for governments of such countries as the United States to ramp up development of government-distributed digital currency. A digital U.S. Dollar, for example, could satisfy many of the Bitcoin investors who look to digital currency as the future while also eliminating the large carbon emissions or energy consumption required to efficiently mine Bitcoin. It is becoming increasingly more likely that government-distributed digital currencies will take Bitcoin’s place as the most valuable digital currency because, as mentioned above, governments in such countries as China have already begun experimenting with their own digital currency. The United States has expressed moderate interest in creating their own digital currency; however, with China finding slow success with their own, it is more than likely that the United States will begin their own efforts in hopes of protecting the U.S. Dollar’s place as one of the world’s most dominant currencies. In the process, they would effectively take Bitcoin’s place as the world’s most dominant digital currency. These middle-ground solutions would reduce, either intentionally or inadvertently, the carbon emissions of the Bitcoin industry without creating confusion in the market or creating a criminal racket.

Conclusion

Bitcoin, blockchain, and cryptocurrencies have become some of the most notable financial instruments in recent years. However, the decentralized nature of the blockchain system has attracted many investors to Bitcoin, leading to concerns over the Bitcoin industry’s increasing energy consumption during the mining process. Decentralization has allowed the Bitcoin industry to consume the same amount of energy as many small to mid-sized countries. The industry’s massive amount of energy consumption has in turn created a significant amount of carbon emissions, again rivaling those of many notable countries.

Bitcoin’s carbon emissions have recently put the industry into conflict with many countries attempting to lower their carbon emissions. Many see Bitcoin as a threat to the Paris Climate Accords, and countries such as China have taken action against Bitcoin in an effort to lower their own carbon emissions. Bans like the one China implemented will end up bringing mining hubs to areas where there is inexpensive but not necessarily clean energy, such as in Kazakhstan and Texas. With the threat of Bitcoin mining further damaging the environment, regulations have been proposed or put in place; however, as it stands right now, nothing significant has been suggested that could efficiently lower the industry’s carbon emissions. Therefore, the best course of action would be a solution between allowing Bitcoin to continue its current course and an industry ban. This would avoid confusion in the market and increased criminal activity while significantly cutting carbon emissions. Every year, the world feels the effects of climate change more acutely. With July 2021 being the hottest month ever recorded in human history, it is imperative to introduce regulation around industry. This is even more important considering the number of transactions Bitcoin is responsible for; its positive effects on society are just too small for it to be allowed to continue in this rapidly heating world.

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