You can't really frame a ban as a way of protecting the little guy if your ban causes everyone who "invested" so far to immediately lose everything. You'd almost certainly be sued and end up paying compensation. Even a partial ban restricting who can invest would be open to accusations of elitism and politically difficult.
I suspect that a politician who thinks the crypto market is going to crash will wait for that to happen before implementing a ban. At that point you will not need to pay compensation and there will be political support for it.
In the meantime the government's best option is probably tight regulation and prosecution of any outright fraudulent operations.
A carbon tax/price might work assuming you could get that through. Then tax a percentage on Bitcoin purchases via exchanges to aloe for the carbon emissions.
Agree it might be workable, although Tobin taxes like this haven't had a lot of support in the past. Also, enforcement is likely to be a bit of a nightmare!
It would raise some money you could use to mitigate environmental impact, but I'm not sure that a reasonable tax level would actually disuade anyone from putting their money in so less helpful from that point of view.
I would imagine enforcement would be similar to tobacco or alcohol or gambling duty which is already done.
I agree it would be hard to get the tax in because of vested interests and yeah people will still buy it but if the money is used to properly offset carbon it might be worth it. But I’m a dreamer!
I suspect that a politician who thinks the crypto market is going to crash will wait for that to happen before implementing a ban. At that point you will not need to pay compensation and there will be political support for it.
In the meantime the government's best option is probably tight regulation and prosecution of any outright fraudulent operations.