Countries say no to energy-sucking Bitcoin mines

Countries around the world are realizing that energy-intensive Bitcoin mining poses serious environmental and economic risks and are taking steps to limit, or even ban, the industry. The rapid growth of Bitcoin mining threaten the stability of national energy systems and drains electricity needed for other basic social needs including electrification of buildings and transport to reduce carbon emissions. In response, new regulations on Bitcoin mining are being adopted to protect electrical grids and climate goals.

Increasingly, national as well as regional and local governments are taking steps to stop, limit and regulate Bitcoin mining as part of a growing effort to create more oversight and impose safety rails on the opaque and polluting industry. We have identified at least eight countries with an outright ban on cryptocurrency mining as of April 2024. These laws are essentially aimed at Bitcoin because it is the largest cryptocurrency and most others do not use Proof of Work (PoW) – the mechanism that requires energy-intensive digital “mining” to verify and secure transactions. There are also other countries with severe restrictions or bans on the use and trading of cryptocurrencies that will make it difficult, if not impossible, to do crypto mining.

The most high profile ban on crypto mining came in 2021 when China, which housed nearly three-quarters of global Bitcoin mining capacity, shut down the industry. The decision by the Chinese government was part of a broader crackdown on cryptocurrencies as well as an effort to achieve national climate goals and direct renewable energy generation to more important social and industrial uses. China’s actions had major repercussions as Bitcoin mining companies fled to other parts of the world looking for cheap energy and lax regulations.

Yet China was not the first government to say no to the industry. Some of the earliest bans on Bitcoin mining were driven by concerns about money laundering and maintaining control over national economies and currencies. One of the first attempts was in Iraq when the Central Bank a declaration in 2017 prohibiting all use and mining of cryptocurrencies. The decision was largely based on anti-money laundering considerations. Another early ban came Algeria in 2018 when the government blocked the use and mining of all cryptocurrencies. Nepal’s banking regulator and supervisor, the Nepal Rastra Bank, issued a notification in 2021 stating that trading and mining of cryptocurrencies was illegal. In 2023, Kuwait has banned Bitcoin mining as part of broader rules on cryptocurrencies issued by a financial regulatory agency.

More recently, countries have blocked Bitcoin mining after seeing how the industry can destabilize energy systems and sap energy supplies. In 2022, Kosovo has banned all crypto mining in an effort to save electricity during an energy crisis. The most recent ban on Bitcoin mining was approved by the Angolan Parliament in April 2024. The law criminalizes crypto-mining with the aim of protecting the country’s electrical grid and energy security.

Scandinavia has been the hub for Bitcoin mining in Europe, but governments and utility companies are starting to crack down on the industry for using too much electricity. For a small country, Iceland offers a relatively large amount of Bitcoin mining, as cheap geothermal and hydroelectric energy has attracted mining companies. However, in December 2021, Iceland’s national power company, Landsvirkjun, started reject new requests to mine Bitcoin due to increasing energy shortages and the need to devote energy to vital industries and community uses. Norway’s relatively cheap electricity has also attracted Bitcoin miners, but there are growing efforts to rein in the industry including proposed bans and the elimination of tax incentives. An April 2024 Act created regulations for data centers, including Bitcoin mines, which involves a framework to register the owners and managers of data centers and the type of services offered. Sweden has essentially ended its Bitcoin mining operation when the government eliminated tax incentives for Bitcoin mines and data centers in July 2023. The action was a response to rising energy prices, partly due to the war in Ukraine. Bitcoin mining companies have complained that the loss of low taxes would “kill” the industry – a sign of how much the industry depends on cheap energy and subsidies.

Kazakhstan once had one of the largest Bitcoin mining industries in the world, jumping to second in 2021 when China banned the industry and companies fled to Kazakhstan for cheap, but dirty, electricity and lax supervision. By 2021, Bitcoin miners consumed more than 7% of all the country’s electricity generation capacity that pushed the grid into deficit. Localized blackouts due to the lack of power resulted in mass protests in 2022. The national government quickly tried to avert a crisis and blocked miners from connecting to the network, although some operations continued illegally. In January 2022 a surcharge was placed on Bitcoin miners for the use of electricity and in July a law was passed that imposes higher taxes on Bitcoin miners based on the average price of electricity to mine Bitcoin. An Act further enacted in February 2023 limited Bitcoin miners ability to use energy by only letting them use electricity when the grid has a surplus. Mining companies will also need to be licensed by the government, bringing more transparency and oversight to the industry.

In Canada, miners are drawn to expanded hydropower, but some provinces and utilities are having second thoughts about the energy-guzzling industry. Several provinces have blocked the expansion of Bitcoin mining because the industry siphons off valuable energy supplies needed for socially beneficial industries that create more jobs. New Brunswick issued a moratorium on new Bitcoin mines in 2023 connect to the network with reference to electricity supply trunks. Legislation for a permanent ban has also been introduced. British Columbia’s provincial power provider, BC Hydro, also has a moratorium in 2022 on new Bitcoin mines says expansion of the industry will threaten clean energy and electrification goals as electricity is needed for housing and transportation needs.

With the energy and carbon footprint of Bitcoin growing, and mining companies looking for cheap energy in new parts of the world, more restrictions and bans on the industry are likely. In Paraguay, for example, lawmakers have suggested at least a temporary ban on Bitcoin mining given its high energy consumption and limited job creation. Yet Bitcoin’s energy – an increasingly political problem – could be solved by eliminating PoW mining and switching to a new mechanism for verifying transactions that doesn’t require country-sized amounts of electricity.

Special thanks to Veronica Kuzuhara for research support.