Swedish regulators call on the EU to ban crypto-mining
One terawatt hour (TWh) of energy is consumed during Bitcoin mining annually in Sweden, which corresponds to the electricity needed for 200,000 households, or 100 million round-trip flights between Sweden and Thailand
Sweden’s financial and environmental supervisory authorities have demanded an EU-wide ban on bitcoin mining.
Finansinspektionen (FSA) and the Swedish Environmental Protection Agency (EPA) presented the proposal to ban all crypto-mining with proof-of-work technology after being disgusted by the large electricity consumption from the sector.
Proof-of-work, which is the verification process for new blocks to be added to the Bitcoin blockchain. New blocks are accepted by the network each time a miner proves that a certain amount of computational effort has been used, which happens about every ten minutes, according to coindesk.com.
Evidence-of-work technology is the dominant cause of Bitcoin mining’s extreme power consumption.
As the demand for crypto continues to grow rapidly, Swedish officials believe that crypto mining needs to use renewable energy.
They also point out that there are other methods for mining cryptocurrencies that could also be used for Bitcoin and Ethereum, which are estimated to reduce energy consumption by 99.95% with the same end functionality for tokens.
Companies that trade and invest in cryptocurrencies extracted using the proof of work method, can not be allowed to describe or market themselves or their business as sustainable, the regulators claimed.
At present, one terawatt-hour (TWh) of energy is consumed during Bitcoin mining annually in Sweden, which corresponds to the electricity needed for 200,000 households, according to the Swedish supervisory authorities, which estimate that emissions from the two largest cryptocurrencies today are equal to 100 million return flights between Sweden and Thailand.
“It is important that every Sweden and EU can use our renewable energy in the place that provides the best benefit to society,” say Erik Thedéen and Björn Risinger, Directors General of the FSA and EPA respectively.
The directors want Sweden to prevent the establishment of new facilities that use energy-intensive coin minting methods, and to prohibit companies from investing in cryptocurrencies extracted with a proof-of-work process.
Thedéen and Risinger have stated some political alternatives, “for example, Sweden and other countries can introduce a tax on the energy-intensive production of Bitcoin … and communicate more broadly about the climate problems related to cryptocurrencies.”
It “will lead to both producers and investors demanding a transition to mining methods that require less energy,” the directors added.
However, Swedish officials are concerned that these proposals may have negative results, as they may encourage crypto-miners to move to other countries and increase global emissions.
Nevertheless, Sweden and the EU should set a good example, in the hope that other regions will follow suit, Thedéen and Risinger believe.
The bottom line is that “emissions must stop here and now, and renewable energy must be used for the climate change of important services,” they concluded.