The environmental cost of cryptocurrency: Assessing carbon emissions from bitcoin mining in China

Abstract

This study estimates the environmental impacts of Bitcoin mining. Employing a top-down measurement approach, this paper assesses the carbon footprint of Bitcoin mining in China from 2017 to 2021. The findings reveal that mining activities during this period contributed to a total of 77.84 million tons of carbon dioxide emissions in China. By utilizing data at the provincial level, we find that the seasonal migration of Bitcoin mining pools will lead to regional power demand shocks in China. Additionally, this study predicts future carbon emissions from Bitcoin mining in China, projecting cumulative carbon dioxide emissions of 76.40 million tons and 722.18 million tons by 2030 and 2060 respectively, in the absence of any policy interventions. Based on these findings, this paper posits that governments worldwide should make efforts to restrict the carbon emissions from Bitcoin mining and opt for environmentally friendly technological methods to fundamentally alleviate Bitcoin's reliance on energy. The implication for central banks is that carbon emission should be taken into consideration when designing the central bank digital currencies (CBDCs).