thecoinrepublic.com
- A top EU financial regulator has revived demands for a bloc-wide “ban” on the most common type of bitcoin mining and expressed concern about the growing share of renewable energy committed to crypto mining.
- “The remedy is to prohibit evidence of work,” said Thedéen, who also serves as the director-general of Sweden’s Financial Supervisory Authority.
Cryptocurrency mining has come under increasing fire for its environmental effect. According to statistics from the Cambridge Bitcoin Electricity Consumption Index, the practice consumes 0.6 percent of the world’s total energy and consumes more electricity each year than Norway.
Govt calling out crypto as a “national concern”
Erik Thedéen, the vice-chair of the European Securities and Markets Authority, told the Financial Times that bitcoin mining had become a “national problem” in his home country of Sweden and that cryptocurrencies presented a risk to reaching the Paris agreement’s climate change targets. To reduce the sector’s massive power consumption, Thedéen suggested that European regulators consider banning the mining approach known as “proof of work” and instead steer the business toward the less energy-intensive “proof of stake” model.
Miners, who solve hard riddles using enormous data centers packed with powerful computers, are paid for logging transactions with newly produced currencies. This necessitates substantially more effort than the proof of stake approach,
“The solution is to ban evidence of labor,” said Thedéen, who is also the director-general of Sweden’s Financial Supervisory Authority and the chair of Iosco’s sustainable finance committee.”The energy profile of stake proof is significantly lower.”
“The worth of crypto assets in terms of societal value is questionable.”
According to Blockchain.com, mining has become a very profitable and competitive business, with the amount of processing power allocated to the operation reaching record highs. China banned the practice in May, but it has spread throughout the world, and there are now numerous publicly traded firms focusing on it, including Canada’s Hut 8.
“We need to have a conversation about changing the sector to a more efficient technology,” Thedéen said, adding that he was not seeking a complete ban on cryptocurrency. He went on to say, “The financial industry and many big organizations are now engaged in cryptocurrency marketplaces, and they have responsibilities.”
His remarks came after Swedish officials originally proposed a ban on the practice in November of last year, citing the increasing quantity of renewable energy allocated to cryptocurrencies while claiming that “the societal benefit of crypto assets is doubtful.”
Bitcoin and ether, the two most popular cryptocurrencies by volume, both use a proof of work methodology, which requires all participants on the blockchain digital record to validate transactions. Faced with rising criticism and a prohibition in China, miners have increased the amount of renewable energy they use to power their computers and shifted operations to nations with abundant wind and solar electricity, such as Sweden and Norway.