The path to sustainable Bitcoin mining: Challenges and barriers

Mohammadhossein Lashkaripour, Seyedmehdi Hosseini, Elnaz Basirian and Elie Bouri

Energy Economics, 2025, vol. 147, issue C

Abstract: This paper investigates the transition to sustainable Bitcoin mining and the associated challenges. We identify two key channels of negative externalities stemming from the operations of carbon-intensive (“brown”) miners that discourage the adoption of environmentally friendly (“green”) mining practices. First, the lottery-like mechanism of Bitcoin mining prioritizes relative computational power, disregarding the energy source. As a result, the intermittent nature of renewable energy and insufficient infrastructure development place green miners at a disadvantage compared to brown miners. Second, the lack of product differentiation in the Bitcoin ecosystem means that both green and brown miners produce indistinguishable outputs. Consequently, all miners, irrespective of their environmental practices, face penalties from climate-conscious investors and policymakers due to the carbon intensity associated with brown mining operations. Certain policy interventions, such as Pigouvian-like subsidies, could mitigate these externalities and promote sustainable mining practices.

Keywords: Bitcoin; Sustainable transition; Network Security; Renewable energy; Mining; Proof-of-Work (search for similar items in EconPapers)
JEL-codes: D49 G12 G19 Q49 Q56 Q59 (search for similar items in EconPapers)
Date: 2025
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Persistent link: https://EconPapers.repec.org/RePEc:eee:eneeco:v:147:y:2025:i:c:s0140988325003275

DOI: 10.1016/j.eneco.2025.108503

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