Decarbonizing Bitcoin: Law and policy choices for reducing the energy consumption of Blockchain technologies and digital currencies
The vast transactional, trust and security advantages of Bitcoin are dwarfed by the intentionally resource-intensive design in its transaction verification process which now threatens the climate we depend upon for survival. Indeed Bitcoin mining and transactions are an application of Blockchain technology employing an inefficient use of scarce energy resources for a financial activity at a point in human development where world governments are scrambling to reduce energy consumption through their Paris Agreement climate change commitments and beyond to mitigate future climate change implications. Without encouraging more sustainable development of the potential applications of Blockchain technologies which can have significant social and economic benefits, their resource-intensive design combined now pose a serious threat to the global commitment to mitigate greenhouse gas emissions. The article examines government intervention choices to desocialise negative environmental externalities caused by high-energy consuming Blockchain technology designs. The research question explores how to promote the environmentally sustainable development of applications of Blockchain without damaging this valuable sector. It studies existing regulatory and fiscal policy approaches towards digital currencies in order to provide a basis for further legal and policy tools targeted at mitigating energy consumption of Blockchain technologies. The article concludes by identifying appropriate fiscal policy options for this purpose, as well as further considerations on the potential for Blockchain technology in climate change mitigation.
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