An executive from the European Securities Watchdog insists that crypto mining using proof-of work should be banned in Europe. According to the regulator, coins that are made using this high-energy method of minting present a danger to efforts for climate change mitigation such as those contained in the Paris Agreement.
EU Now Targets Bitcoin Mining for Burning Too Many Renewable Energy
One high ranking financial regulator reiterated his call for an EU-wide ban of cryptocurrency mining that is based on proof-of-work. The power-hungry model employed in the minting of major cryptocurrencies like bitcoin — as well as ethereum at this point — has been blamed for using increasing amounts of renewable energy, allegedly slowing down climate transition in other sectors.
Speaking to the Financial Times, the Vice-Chair of the European Securities and Markets Authority Erik Thedéen stated that regulators on the Old Continent should consider banning proof-of-work mining and try to steer the industry towards the less energy-intensive proof-of-stake method. According to the ESMA official this will reduce its enormous power consumption.
Thedéen, who also serves as director-general of Sweden’s Financial Services Authority, noted that bitcoin mining has become a “national issue” for his own country. In November, he and Björn Risinger, head of the Swedish Environmental Protection Agency, singled out proof-of-work mining as the main reason for bitcoin’s high energy usage and issued the initial call for a ban in the EU.
“The solution is to ban proof of work,” Thedéen has now insisted again, emphasizing that proof-of-stake has a significantly lower energy profile. “We need to have a discussion about shifting the industry to a more efficient technology,” the regulator elaborated. Thedéen was clear, however, that he was not advocating a wide crypto prohibition.
Its growing environmental impacts have been criticised by cryptocurrency mining. Last May, China — which at the time had the largest share of the global hashrate — launched a crackdown on the industry following President Xi Jinping’s pledge to achieve carbon neutrality. Since then, miners have worked to improve the percentage of renewable energy used in their power supply. However, Erik Thedéen says:
It would be an irony if the wind power generated on Sweden’s long coastline would be devoted to bitcoin mining.
Companies that mine have relocated to developed countries like Sweden or Norway with solar and wind power generation capacities. The Swedish proposal is being supported by some. Thedéen now warns that if authorities fail to intervene, a significant amount of renewable energy would go towards minting digital currencies instead of helping traditional services move away from coal-powered energy sources.
Do you think the EU will respond to Sweden’s call and ban proof-of-work crypto mining? Please comment below with your thoughts.
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