The issue is finance firms will get (are getting) involved. It becomes easy to purchase an inefficient energy production source (old coal, natural gas, etc.) that cities/counties/states are trying to get rid of which would otherwise sit dormant and require some sort of upkeep. As soon as such a company goes public they'll have more money to purchase up more (financially cheap, environmentally expensive) sources of direct electricity and they'll be bound to do so since it's in the best interest of the shareholder to continue to mine.

Perhaps bitcoin is a nice academic theory and would work well if humans were responsible. Just like nuclear cars are nice in theory - so long as people don't have accidents.

Edit:

> If needed, we can better incentivize green bitcoin mining with carbon taxes or renewable energy mining subsidies.

Plastic is a wonderful material but virgin plastic is cheaper than recycled and various attempts to artificially decrease the price of recycled plastic via government incentive programs haven't worked.

Electronics are awesome, but despite efforts to recycle electronic waste it all ends up in third world countries where it gets burned off. it's just cheaper that way. Some ecyclers were even caught trying to game the system. Taking government incentives and still shipping e-waste overseas.

I'd like to believe in the idea that some sort of incentive program would come into place but so far none have worked in the may other industries that desperately need it.