China is cracking down on Bitcoin mining, and some experts fear that the cryptocurrency’s environmental footprint could become dirtier as a result. 

Bitcoin is incredibly energy hungry. To create new coins, miners race to solve complex puzzles using specialized machines. As a result, Bitcoin is estimated to use as much electricity annually as the entire country of Poland. Until this year, a majority of that electricity came from a mix of coal and hydropower in China. Last week, China sounded the death knell for Bitcoin mining within its borders when it made all cryptocurrency transactions and mining illegal — although most mining operations fled earlier in the year when bans were announced in provinces where most had previously set up shop. 

The proportion of miners still left in China is now close to zero, says Michel Rauchs, a research affiliate at the Cambridge Centre for Alternative Finance. That has big implications for Bitcoin’s carbon footprint because emissions used to follow the ebb and flow of China’s dry and wet seasons. Miners took advantage of excess hydropower in China’s Sichuan province during the wet season each year, taking advantage of cheap, carbon-free energy. When that dried up, they moved north to Xinjiang province, where coal primarily powered their puzzle-solving. Coal is the dirtiest fossil fuel, emitting more carbon dioxide when burned than oil and gas. 

Now, “both of these sources for Bitcoin mining have been basically eliminated,” says Susanne Köhler, a PhD fellow at Denmark’s Aalborg University who published a 2019 paper on Bitcoin’s impact on the environment. Both Köhler and Rauchs are still unsure about what that means for Bitcoin’s carbon emissions moving forward. It’ll depend on whether miners find another source of abundant clean energy like hydropower, turn to coal, or go with natural gas.

But there’s a good chance Bitcoin is getting dirtier, says economist Alex de Vries, who has published research on Bitcoin’s pollution and e-waste. “Instead of using coal for just part of the year, they might be running on coal or natural gas all year long, and that’s definitely not going to have a positive impact,” he says.

Three countries are emerging as the new hotspots for Bitcoin mining, according to Cambridge’s Rauchs. “Now, the US seems to have become the largest mining center,” he says, based on preliminary data that Cambridge plans to release in coming weeks. 

As Bitcoin miners flocked to the US earlier this year, they cozied up with coal and natural gas. The cryptocurrency revived a natural gas plant in Dresden, New York, that had previously stopped generating power for the public Grist reports. In Pennsylvania, a Bitcoin mining company is burning up waste coal to power up its machines.

Bitcoin’s exorbitant energy has been getting more scrutiny as more governments set carbon-cutting goals. China, currently the world’s biggest greenhouse gas polluter, is committed to bringing its emissions down to net zero by 2060. That was one reason the country gave for its crackdown on cryptocurrencies, although the move also helped pave the way for China’s own forthcoming digital currency.

Even if cryptocurrency operations decide to shift to more renewable energy sources to make themselves more palatable to climate-conscious governments, they’ll still face steep competition from other industries. The aluminum industry has recently sought to use more of China’s hydropower in an effort to cut down on its emissions, competing with miners for the resource. Adding to the energy crunch, hydropower isn’t limitless — recent droughts in China cut into the country’s existing hydroelectric supply. Severe drought is also reducing hydroelectric power generation in the western US.

Competition can also end up driving more pollution into the atmosphere, even in areas with clean energy sources. When utilities run low on or use up all the available hydropower, they often turn to dirty natural gas to meet demand. The demand for energy can also make things more costly for locals. In the US, Bitcoin miners flocked to places with cheap hydroelectricity, including East Wenatchee, Washington and Plattsburgh, New York. Mining gobbled up so much electricity that it drove utility bills up for local residents. 

Kazakhstan and Russia are the other two countries luring in the most miners. Kazakhstan, bordering Xinjiang, China, still relies primarily on coal for its electricity generation. Hydropower makes up about 17 percent of Russia’s electricity mix, which is still primarily dominated by fossil fuels.

Earlier this year, a blog and proof of concept model made the rounds in the cryptocurrency community that made the argument that Bitcoin can spur renewable energy growth. In theory, Bitcoin could help utilities generate the capital needed to upgrade the grid so it can handle more intermittent sources of energy like solar power, according to the analysis by high-profile asset management company ARK Invest. 

That argument hasn’t won over Köhler or de Vries. “Until we see implementation of this, I’m skeptical,” Köhler says. The model is based on the assumption that mining machines only operate during part of the day, not 24/7 like they typically do. Köhler and de Vries don’t see the incentive for miners to cut into their profit by limiting their operations. “Just to cover the impacts of their community, the [Bitcoin] community will have to take tremendous steps to introduce renewable energies. And this has not happened,” Köhler says. 

The other thing to keep in mind, experts tell The Verge, is that the biggest driver of Bitcoin’s emissions is its profitability. The higher its price — it’s currently at about $43,000 per coin — the more incentive there is to mine it. With more mining comes more energy consumption and pollution balloons. And despite the global shuffling around this year, Bitcoin’s energy consumption — and presumably its emissions — has still managed to grow. 

There are other cryptocurrencies that have figured out how to solve the pollution problem. Ethereum, for example, plans to take puzzles out of the process for minting new tokens, which would slash nearly all of its emissions. But as long as Bitcoin is still the biggest player — and there are no plans for it to move away from its current polluting model — the cryptocurrency community will continue to grapple with its huge carbon footprint.