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NATURE COMMUNICATIONS | https://doi.org/10.1038/s41467-021-22256-3 ARTICLE penalties, at 217.37Twh. However, the results of the market access and site regulation scenarios indicate that the total energy consumption of the Bitcoin industry will reach 350.11 Twh and 319.80 Twh, respectively, in 2024 and 2025. It is clear that the carbon emission behavior of the Bitcoin industry is consistent with the Bitcoin blockchain energy consumption intensity. In the BM scenario, annual carbon emission of the Bitcoin industry is expected to reach its maximum in 2024, at 130.50 million metric tons. In essence, the carbon emission pattern of the Bitcoin industry would become an increasing threat to China’s greenhouse emission reduction target. At the international level, the estimated Bitcoin carbon emission in China exceeds the total greenhouse emission of the Czech Republic and Qatar in 2016, ranking it 36th worldwide. At the domestic level, the emission output of the Bitcoin mining industry would rank in the top 10 among 182 Chinese prefecture- level cities and 42 major industrial sectors. In comparison, the carbon emissions generated by Bitcoin blockchain experienced a significant reduction in SR and CT scenarios, which illustrate the positive impact of these carbon-related policies. On the contrary, the MA scenario witnesses a considerable increase of Bitcoin carbon emission to 140.71 million metric tons in 2025. Based on the scenario results of the BBCE model, the Benchmark scenario indicates that the energy consumed and the carbon emissions generated by Bitcoin industry operation are simulated to grow continuously as long as mining Bitcoin maintains its profitability in China. This is mainly due to the positive feedback loop of the PoW competitive mechanism, which requires advanced and high energy-consuming mining hardware for Bitcoin miners in order to increase the probability of earning block rewards. In addition, the flows and long-term trend of carbon emission simulated by the proposed system dynamics model are consistent with several previous estimations10,13, which are devoted to precisely estimate the carbon footprint of Bitcoin blockchain. The Paris Agreement is a worldwide agreement committed to limit the increase of global average temperature22,23. Under the Paris Agreement, China is devoted to cut down 60% of the carbon emission per GDP by 2030 based on that of 2005. However, according to the simulation results of the BBCE model, we find that the carbon emission pattern of Bitcoin blockchain will become a potential barrier against the emission reduction target of China. As shown in Fig. 3, the peak annualized emission output of the Bitcoin mining industry would make it the 10th largest emitting sector out of a total of 42 major Chinese industrial sectors. In particular, it would account for approximately 5.41% of the emissions of the electricity generation in China according to the China Emission Accounts & Datasets (www.ceads.net). The peak carbon emission per GDP of Bitcoin industry is expected to sit at 10.77 kg per USD. In addition, in the current national economy and carbon emission accounting of China, the operation of the Bitcoin blockchain is not listed as an independent department for carbon emissions and productivity calculation. This adds difficulty for policy makers to monitor the actual behaviors of the Bitcoin industry and design well-directed policies. In fact, the energy consumption per transaction of Bitcoin network is larger than numerous mainstream financial transaction channels17. To address this issue, we suggest policy makers to set up separated accounts for the Bitcoin industry in order to better manage and control its carbon emission behaviors in China. Carbon policy effectiveness evaluation. Policies that induce changes in the energy consumption structure of the mining activities may be more effective than intuitive punitive measures in limiting the total amount of energy consumption and carbon emission in the Bitcoin blockchain operation. Figure 4 presents the values of key parameters simulated by BBCE model. The carbon emission per GDP of the BM scenario in China is larger than that of all other scenarios throughout the whole simulation period, reaching a maximum of 10.77 kg per USD in June 2026. However, we find that the policy effectiveness under the MA and CT scenario is rather limited on carbon emission intensity reduction, i.e., the policy effectiveness of Market access is expected to reduce in August 2027 and that of Carbon tax is expected to be effective until July 2024. Among all the intended policies, Site Regulation shows the best effectiveness, reducing the peak carbon emission per GDP of the Bitcoin industry to 6 kg per USD. Overall, the carbon emission per GDP of the Bitcoin industry far exceeds the average industrial carbon intensity of China, which indicates that Bitcoin blockchain operation is a highly carbon-intense industry. In the BM scenario, Bitcoin miners’ profit rate are expected to drop to zero in April 2024, which suggests that the Bitcoin miners will gradually stop mining in China and relocate their operation elsewhere. However, it is important to note that the entire relocation process does not occur immediately. Miners with higher sunk costs tend to stay in operation longer than those with lower sunk costs, hoping to eventually make a profit again. Consequently, the overall energy consumption associated with Bitcoin mining remains positive until the end of 2030, at which time almost all miners would have relocated elsewhere. Correspondingly, the network hash rate is computed to reach 1775 EH per second in the BM scenario and the miner total cost to reach a maximum of 1268 million dollars. Comparing the scenario results for the three policies, the profitability of mining Bitcoin in China is expected to deteriorate more quickly in the CT scenario. On the other hand, Bitcoin blockchain can maintain profitability for a longer period in MA and SR scenarios. Some attractive conclusions can be drawn based on the results of BBCE simulation: although the MA scenario enhances the market access standard to increase Bitcoin miners’ efficiencies, it actually raises, rather than reduces, the emission output based on the simulation outcome. In the MA scenario, we observe the phenomenon of incentive effects proposed by previous works, which is identified in other fields of industrial policies, such as monetary policies, transportation regulations, and firm investment strategies24–26. In essence, the purpose of the market access policy is to limit the mining operations of low-efficiency Bitcoin miners in China. However, the surviving miners are all devoted to squeezing more proportion of the network hash rate, which enables them to stay profitable for a longer period. In addition, the Bitcoin industry in China generates more CO2 emissions under the MA scenario, which can be mainly attributed to the Proof-of-Work (PoW) algorithm and profit-pursuit behaviors of Bitcoin miners. The results of the MA scenario indicate that market-related policy is likely to be less effective in dealing with high carbon emission behaviors of the Bitcoin blockchain operation. The carbon taxation policy is widely acknowledged as the most effective and most commonly implemented policy on carbon emission reduction27. However, the simulation results of the CT scenario indicate that carbon tax only provides limited effective- ness for the Bitcoin industry. The carbon emission patterns of the CT scenario are consistent with the BM scenario until Bitcoin miners are aware that their mining profits are affected by the punitive carbon tax on Bitcoin mining. On the contrary, the evidence from the SR scenario shows that it is able to provide a negative feedback for the carbon emissions of Bitcoin blockchain operation. In our simulation, the maximized carbon emission per GDP of the Bitcoin industry is halved in the SR scenario in comparison to that in the BM scenario. It is interesting to note that although the peak annualized energy consumption cost of the Bitcoin mining industry in the SR scenario is higher than that in the BM scenario, a significantly higher proportion of miners have NATURE COMMUNICATIONS | (2021)12:1938 | https://doi.org/10.1038/s41467-021-22256-3 | www.nature.com/naturecommunications 5PDF Image | carbon emission flows and sustainability of Bitcoin blockchain
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