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This paper uses the theory of carbon footprint to create a theoretical model for Bitcoin blockchain carbon emission assessment and policy evaluation 11 , First, we establish the system boundary and feedback loops for the Bitcoin blockchain carbon emission system, which serve as the theoretical framework to investigate the carbon emission mechanism of the Bitcoin blockchain.

The BBCE model consists of three interacting subsystems: Bitcoin blockchain mining and transaction subsystem, Bitcoin blockchain energy consumption subsystem, and Bitcoin blockchain carbon emission subsystem.

Specifically, transactions packaged in the block are confirmed when the block is formally broadcasted to the Bitcoin blockchain. To increase the probability of mining a new block and getting rewarded, mining hardware will be updated continuously and invested by network participants for a higher hash rate, which would cause the overall hash rate of the whole network to rise.

The network mining power is determined by two factors: first, the network hash rate hashes computed per second positively accounts for the mining power increase in the Bitcoin blockchain when high hash rate miners are mining; second, power usage efficiency PUE is introduced to illustrate the energy consumption efficiency of Bitcoin blockchain as suggested by Stoll The network energy cost of the Bitcoin mining process is determined by the network energy consumption and average electricity price, which further influences the dynamic behavior of Bitcoin miners.

The BBCE model collects the carbon footprint of Bitcoin miners in both coal-based energy and hydro-based energy regions to formulate the overall carbon emission flows of the whole Bitcoin industry in China. It also serves as an auxiliary factor to generate the carbon emission per GDP in our model, which provides guidance for policy makers in implementing the punitive carbon taxation on the Bitcoin mining industry.

Bitcoin blockchain reward halving occurs every four years, which means that the reward of broadcasting a new block in Bitcoin blockchain will be zero in As a result, the Bitcoin market price increases periodically due to the halving mechanism of Bitcoin blockchain. Miners will gradually stop mining in China or relocate to elsewhere when the mining profit turns negative in our BBCE simulation. We find that the annualized energy consumption of the Bitcoin industry in China will peak in at This exceeds the total energy consumption level of Italy and Saudi Arabia and ranks 12th among all countries in Correspondingly, the carbon emission flows of the Bitcoin operation would peak at Internationally, this emission output surpasses the total greenhouse gas emission output of the Czech Republic and Qatar in reported by cia.

Domestically, the emission output of the Bitcoin mining industry would rank in the top 10 among prefecture-level cities and 42 major industrial sectors in China, accounting for approximately 5. In addition, the maximized carbon emission per GDP of the Bitcoin industry would reach Through scenario analysis, we find that some commonly implemented carbon emission policies, such as carbon taxation, are relatively ineffective for the Bitcoin industry.

On the contrary, site regulation policies for Bitcoin miners which induce changes in the energy consumption structure of the mining activities are able to provide effective negative feedbacks for the carbon emission of Bitcoin blockchain operation. Results The energy and carbon emission problem of Bitcoin mining in China Although the Proof-of-Work PoW consensus algorithm has enabled Bitcoin blockchain to operate in a relatively stable manner, several unexpected behaviors of the Bitcoin blockchain have been detected: first, the attractive financial incentive of Bitcoin mining has caused an arms race in dedicated mining hardware The mining hardware has evolved through several generations.

Nevertheless, the rapid hardware development and fierce competition have significantly increased the capital expenditure for Bitcoin mining 15 ; second, the Bitcoin mining activity and the constant-running mining hardware has led to large energy consumption volume. Previous literature has estimated that the Bitcoin blockchain could consume as much energy per year as a small to medium-sized country such as Denmark, Ireland, or Bangladesh 16 ; finally, the large energy consumption of the Bitcoin blockchain has created considerable carbon emissions see Supplementary Fig.

It is estimated that between the period of January 1st, and June 30th, , up to 13 million metric tons of CO2 emissions can be attributed to the Bitcoin blockchain Although the estimate ranges vary considerably, they have indicated that energy consumption of network and its corresponding environmental impacts have become a non-negligible issue.

The growing energy consumption and the environmental impacts of the Bitcoin blockchain have posed problems for many countries, especially for China. As one of the largest energy consuming countries on the planet, China is a key signatory of the Paris Agreement 18 , 19 , However, without appropriate interventions and feasible policies, the intensive Bitcoin blockchain operation in China can quickly grow as a threat that could potentially undermine the emission reduction effort taken place in the country Some rural areas in China are considered as the ideal destination for Bitcoin mining mainly due to the cheaper electricity price and large undeveloped land for pool construction.

Full size image Suggested by the previous work 21 and the subsystems of our proposed BBCE model, we consider three main Bitcoin policies conducted at different stages of the Bitcoin mining industry, which then formulates the four scenario assessments for Bitcoin blockchain carbon emission flows in Table 1. In detail, Benchmark BM scenario is a baseline and current scenario of each policy factor, which suggests that the Bitcoin industry continues to operate under minimal policy intervention.

Moreover, the punitive carbon tax will be imposed if the carbon emission per GDP of the Bitcoin industry is greater than 2. In the other three scenarios, policies on different Bitcoin mining procedures are adjusted due to energy saving and emission reduction concerns. Specifically, in the Bitcoin mining and transaction subsystem, market access standard for efficiency is doubled, i. In the carbon tax CT scenario, carbon tax is increased to two-times the initial value to enforce more strict punishment for high carbon emission behaviors of Bitcoin blockchain.

Utilizing the above scenarios, carbon emission flows and energy consumptions of Bitcoin blockchain are assessed, the carbon and energy reduction effectiveness of different policies are evaluated in BBCE simulations from the period of — Table 1 Scenario parameter settings.

Full size table Carbon emission flows of Bitcoin blockchain operation Without any policy interventions, the carbon emission pattern of the Bitcoin blockchain will become a non-negligible barrier against the sustainability efforts of China.

The peak annual energy consumption and carbon emission of the Bitcoin blockchain in China are expected to exceed those of some developed countries such as Italy, the Netherlands, Spain, and Czech Republic. Figure 2 reports the estimated annualized energy consumption and carbon emission flows of Bitcoin blockchain in China. As the baseline assessment under minimal policy intervention, the Benchmark scenario simulates the natural operation results of the Bitcoin blockchain.

In the BM scenario, the annual energy consumption of Bitcoin blockchain in China will gradually grow and eventually peak in , at This suggests that Bitcoin industry operation would follow an energy intensive pattern. In fact, energy consumed by Chinese Bitcoin blockchain in will exceed the energy consumption level of Italy and Saudi Arabia in , ranking it 12th among all the countries.

Regarding the carbon tax scenario, the highest energy demand of the Bitcoin industry slightly decreases due to carbon emission penalties, at However, the results of the market access and site regulation scenarios indicate that the total energy consumption of the Bitcoin industry will reach Estimated annualized energy consumption a and carbon emission flows b of Bitcoin operation in China are generated through monthly simulation results of BBCE modeling from to The blue, red, yellow, and green bars in a and b indicate the annual energy consumption and carbon emission flows of Chinese Bitcoin industry in benchmark, site regulation, market access, and carbon tax scenario, respectively.

Full size image 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 , at At the international level, the estimated Bitcoin carbon emission in China exceeds the total greenhouse emission of the Czech Republic and Qatar in , ranking it 36th worldwide. At the domestic level, the emission output of the Bitcoin mining industry would rank in the top 10 among 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 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 estimations 10 , 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 temperature 22 , 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. In particular, it would account for approximately 5. The peak carbon emission per GDP of Bitcoin industry is expected to sit at 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 channels 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.

In Fig. Annual energy consumption and ranking by countries a are obtained from cia. The carbon emission by Chinese cities c and industrial sectors d are obtained from China Emission Accounts and Datasets www. Due to the unreleased or missing data in some database, the above energy consumption and carbon emission data are obtained for level. Full size image 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 However, we find that the policy effectiveness under the MA and CT scenario is rather limited on carbon emission intensity reduction, i.

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. Based on the regressed parameters of the BBCE model, the whole sample timesteps of network carbon emission assessment cover the period from January to January 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 , at which time almost all miners would have relocated elsewhere. Correspondingly, the network hash rate is computed to reach EH per second in the BM scenario and the miner total cost to reach a maximum of 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. 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 strategies 24 , 25 , 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 reduction However, the simulation results of the CT scenario indicate that carbon tax only provides limited effectiveness 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 relocated to conduct Bitcoin mining operation in the hydro-rich area in the SR scenario.

Consequently, this naturally lowers the associated carbon emission cost in comparison to the BM scenario. In general, the carbon emission intensity of the Bitcoin blockchain still far exceeds the average industrial emission intensity of China under different policy interventions, including limiting Bitcoin mining access, altering the miner energy consumption structure and implementing carbon emissions tax.

This result indicates the stable high carbon emission property of Bitcoin blockchain operations. Nevertheless, it is rather surprising to arrive at the conclusion that the newly introduced cryptocurrency based on disruptive blockchain technology is expected to become an energy and carbon-intensive industry in the near future. A conventional ledger records the transfers of actual bills or promissory notes that exist apart from it, but the blockchain is the only place where bitcoins can be said to exist in the form of unspent outputs of transactions.

When a user sends bitcoins, the user designates each address and the amount of bitcoin being sent to that address in an output. To prevent double spending, each input must refer to a previous unspent output in the blockchain. Since transactions can have multiple outputs, users can send bitcoins to multiple recipients in one transaction.

As in a cash transaction, the sum of inputs coins used to pay can exceed the intended sum of payments. In such a case, an additional output is used, returning the change back to the payer. The size of transactions is dependent on the number of inputs used to create the transaction and the number of outputs.

The block size limit of one megabyte was introduced by Satoshi Nakamoto in Eventually, the block size limit of one megabyte created problems for transaction processing, such as increasing transaction fees and delayed processing of transactions. Creating a bitcoin address requires nothing more than picking a random valid private key and computing the corresponding bitcoin address.

This computation can be done in a split second. But the reverse, computing the private key of a given bitcoin address, is practically unfeasible. Moreover, the number of valid private keys is so vast that it is extremely unlikely someone will compute a key pair that is already in use and has funds. The vast number of valid private keys makes it unfeasible that brute force could be used to compromise a private key.

To be able to spend their bitcoins, the owner must know the corresponding private key and digitally sign the transaction. The chips pictured have become obsolete due to increasing difficulty. Today, bitcoin mining companies dedicate facilities to housing and operating large amounts of high-performance mining hardware. Because the difficulty target is extremely small compared to a typical SHA hash, block hashes have many leading zeros [6] : ch.

Every 2, blocks approximately 14 days given roughly 10 minutes per block , nodes deterministically adjust the difficulty target based on the recent rate of block generation, with the aim of keeping the average time between new blocks at ten minutes. In this way the system automatically adapts to the total amount of mining power on the network. Independent miners may have to work for several years to mine a single block of transactions and receive payment.

In a mining pool, all participating miners get paid every time any participant generates a block. This payment is proportionate to the amount of work an individual miner contributed to the pool. The bitcoin protocol specifies that the reward for adding a block will be reduced by half every , blocks approximately every four years. The network also has no central storage; the bitcoin ledger is distributed. Until a new block is added to the ledger, it is not known which miner will create the block.

They are issued as a reward for the creation of a new block. Although bitcoin can be sent directly from user to user, in practice intermediaries are widely used. The pool has voluntarily capped its hashing power at Owners of bitcoin addresses are not explicitly identified, but all transactions on the blockchain are public. In addition, transactions can be linked to individuals and companies through "idioms of use" e. Researchers have pointed out that the history of each bitcoin is registered and publicly available in the blockchain ledger, and that some users may refuse to accept bitcoins coming from controversial transactions, which would harm bitcoin's fungibility.

Gox froze accounts of users who deposited bitcoins that were known to have just been stolen. Bitcoin Core, a full client Electrum, a lightweight client A wallet stores the information necessary to transact bitcoins. While wallets are often described as a place to hold [60] or store bitcoins, due to the nature of the system, bitcoins are inseparable from the blockchain transaction ledger. A wallet is more correctly defined as something that "stores the digital credentials for your bitcoin holdings" and allows one to access and spend them.

Software wallets The first wallet program, simply named Bitcoin, and sometimes referred to as the Satoshi client, was released in by Satoshi Nakamoto as open-source software. They have an inverse relationship with regard to trustlessness and computational requirements. Full clients verify transactions directly by downloading a full copy of the blockchain over GB as of January [update]. Full clients check the validity of mined blocks, preventing them from transacting on a chain that breaks or alters network rules.

Lightweight clients consult full nodes to send and receive transactions without requiring a local copy of the entire blockchain see simplified payment verification — SPV. This makes lightweight clients much faster to set up and allows them to be used on low-power, low-bandwidth devices such as smartphones.

When using a lightweight wallet, however, the user must trust full nodes, as it can report faulty values back to the user. Lightweight clients follow the longest blockchain and do not ensure it is valid, requiring trust in full nodes. In this case, credentials to access funds are stored with the online wallet provider rather than on the user's hardware. A malicious provider or a breach in server security may cause entrusted bitcoins to be stolen.

An example of such a security breach occurred with Mt. Gox in Both the private key and the address are visible in text form and as 2D barcodes. A paper wallet with the address visible for adding or checking stored funds. The part of the page containing the private key is folded over and sealed. A brass token with a private key hidden beneath a tamper-evident security hologram.

A part of the address is visible through a transparent part of the hologram. A hardware wallet peripheral which processes bitcoin payments without exposing any credentials to the computer Wallet software is targeted by hackers because of the lucrative potential for stealing bitcoins. These devices store private keys and carry out signing and encryption internally, [71] and do not share any sensitive information with the host computer except already signed and thus unalterable transactions.

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Enthusiasts find these aspects of cryptocurrency deeply appealing. Many Bitcoin investors believe the less government involvement in money, the better. Others prefer to engage in financial transactions that are hard to trace by the authorities. Unfortunately, these are also big advantages for scammers who set up fake websites purporting to offer new investors the chance to make a quick buck. This is what happened to one victim of a scheme from Australia. Moreover, the Instagram account was full of testimonial videos and other folks endorsing the service, and had thousands of followers.

It looked legitimate. He then prostelyzed his newfound opportunity to friends and family. Then the account disappeared, and the thief with it. Not only did he lose his money, but some of his friends no longer speak to him. The entire cost of these types of Ponzi-style Bitcoin scams can be enormous.

Celebrities and famous figures around the world all went to their Twitter accounts simultaneously to promote the same Bitcoin giveaway offer. Shockingly, it seemed too good to be true. As you probably guessed, the giveaway offers were all part of an unprecedented Twitter hack.

These types of scams, though, are nothing new. Mike met a woman named Jenny on Tinder. They struck up a relationship, texting on Tinder and WhatsApp. After about a month, Jenny told Mike that she had a good tip. Eventually the con grew deeper. Does Elon Musk own bitcoin? Elon Musk, the CEO of Tesla, said that he still holds and would not sell his cryptocurrency holdings. Who got rich off bitcoin? How can I get 1 bitcoin fast?

By taking part in airdrops Airdrops are a kind of marketing that includes distributing coins or tokens to wallet addresses in order to raise awareness of a new virtual currency. Airdrops are the simplest and most efficient method to get free Bitcoin. Can you go to jail for Bitcoin? It is never worth it to take such a risk. Which country has most bitcoin? A blockchain is a digital ledger that records Bitcoin transactions. Choose from a variety of stocks and mutual funds. Which cryptocurrency is best?

Cryptocurrencies are often in the news. The best ten stocks to buy in May are shown below. Depending on your area, LocalBitcoins allows a variety of payment options. Can Bitcoin get to k? What will Bitcoin be worth in 5 years? How do I track Bitcoin value? Coinbase features graphs that show the price of Bitcoin in USD and the number of Bitcoin transactions every day.

Coinbase is one of the few trackers that also keeps track of transaction volume, which may be useful to some. You may choose the time range of the graph, like with most other trackers, from 1 day to All. Is Bitcoin high or low right now?

Bitcoin mining statistics: For successfully validating a new block on the Bitcoin network, a miner presently gets 6. Conclusion Today, the value of a bitcoin is worth 4. The price has been increasing over time and it is expected to continue rising in the future.

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