We present the first piece of empirical evidence on blockchain adoption for environmental monitoring. Using a staggered difference-in-difference (DID) framework, we find that the concentrations of SO2, NO2, CO in blockchain adopting cities in China are on average lower by 17%, 8% and 4% compared to other cities. However, the blockchain monitoring system is also coming with a decrease in economic activities. The quarterly GDP growth is reduced by 1.6%-2.6% in blockchain adopting cities, which is mostly driven by the reduction in the industrial sector. Further evidence shows that firms in adopting cities open more plants in other cities to avoid regulation. We then build a theory of endogenous pollution behaviors, environmental monitoring, and blockchain adoption to elucidate how blockchains without crypto affect environmental monitoring efficiency and pollution levels. The model implies that adopting blockchains reduces the pollution level in a city, however, it also decreases its production and market share of firms as firms relocate to other cities. The city that cares more about the environment quality is more likely to adopt the blockchain. Lastly, high adoption costs and pollution benefits may cause inefficient under-adoption, and a wealth transfer is necessary to coordinate full adoption and thus achieve the social optimum.
bankruptcy Blockchain Environment Monitoring sustainability technology adoption regulation