We explore the effects of a blockchain-based environmental monitoring technology on emissions. Our model of firm competition in the presence of regional regulators reveals that blockchain adoption reduces industrial pollution but triggers business relocation, creating trade-offs between local emission reduction and economic contraction. When pollution-induced social losses are highly dispersed across cities, a partial-adoption equilibrium fails to mitigate aggregate emissions because of the pollution leakage. We further present the first piece of empirical evidence corroborating model predictions, by taking advantage of a recent regulation change in China. The concentrations of SO2, NO2, and CO in blockchain-adopting cities are on average 16.6%, 7.9% and 4.6%, respectively, lower than other cities. However, blockchain-based monitoring disproportionately hurts the industrial sector, and the average economic activities is reduced by 1.8%-2.6%. Firms in adopting cities open more non-local plants to avoid regulation. For more details, see our work.