Sweden’s financial and environmental regulators have called for an EU-wide ban on bitcoin mining.
The Swedish Financial Supervisory Authority (FSA) and Environmental Protection Agency (EPA) made the proposal to ban any crypto mining using the proof-of-work technique 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 every time a miner proves a specific amount of computational effort was used, which happens approximately every 10 minutes, according to coindesk.com.
The proof-of-work technique is the predominant reason for Bitcoin mining’s extreme power consumption.
As 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 crypto-assets 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 the tokens.
Companies who trade and invest in crypto assets mined using the proof of work method, cannot be allowed to describe or market themselves or their activities as sustainable, the regulators argued.
Currently, one terawatt-hour (TWh) of energy is consumed in Bitcoin mining annually in Sweden, equivalent to the power needed for 200,000 households, according to the Swedish regulators, calculating that emissions from the two largest crypto-assets today is equal to 100mln round-trip flights between Sweden and Thailand.
“It is vital that each Sweden and the EU can use our renewable power in the place it gives the best profit for society,” said Erik Thedeen and Bjorn Risinger, director generals of the FSA and EPA, respectively.
The directors want Sweden to prevent new facilities that employ energy-intensive coin minting methods from being established, as well as banning companies from investing in cryptos mined with a proof-of-work process.
Thedeen and Risinger have set out a few policy options, “for instance, Sweden and other countries could introduce a tax on the energy-intensive production of Bitcoin… and communicate more widely around the climate problems related to crypto-assets.”
It “will lead to both producers and investors demanding a shift to mining methods that require less energy,” the directors added.
However, the Swedish officials are concerned these suggestions may have adverse results, as they could encourage crypto miners to relocate to other countries and increase global emissions.
Nonetheless, Sweden and the EU should set an example, in the hope that other regions will follow suit, Thedeen and Risinger believe.
The bottom line is that “the emissions need to stop here and now, and renewable energy needs to be used for the climate transition of essential services,” they concluded.