Swedish regulators believe that mining Bitcoin and other cryptocurrencies using the Proof-of-Work (PoW) algorithm contradicts the Paris Agreement on Climate Change. To ban or not to ban seems to be the urgent question now.
Erik Thedéen, Head of the Financial Supervisory Authority, and Björn Risinger, Head of the Environmental Protection Agency, have made a joint statement and urged to ban crypto mining based on PoW algorithm, the most common yet the most “energy-intensive” method for producing crypto assets.
The heads pointed out that crypto mining produces emissions of up to 120 million tons of CO2 into the atmosphere per year at the current market valueб which corresponds to the carbon footprint of 100 million round-trip flights between Thailand and Sweden.
According to the watchdogs, the growing attention to environmental friendliness of crypto mining has encouraged more and more miners to explore the possibilities of renewable energy sources. Scandinavia offers rather low prices and makes renewable energy available to a plethora of industry participants, who are increasingly considering a move to the region.
Sweden’s electricity consumption for mining has increased by hundreds of percent since April 2021. In August 2021 the figure hit 1 TWh. The officials argue that renewable energy shouldn’t be wasted on mine cryptocurrencies, which is utterly unwise:
“This energy is urgently required for the development of fossil-free steel, large-scale battery manufacturing and the electrification of our transport sector. 900 bitcoins are mined every day. This is not a reasonable use of our renewable energy,” the statement follows.
The department managers referred to data from the University of Cambridge, which proves that the electricity used to extract 1 BTC is enough to drive 1.8 million kilometers in a medium-sized electric car.
“There are other methods for mining crypto-assets, that could also be used for Bitcoin and Ethereum, that are estimated to reduce energy consumption by 99.95% with maintained functionality,” the officials stressed. “It is important that Sweden and the EU lead the way and set an example in order to maximize our chances of meeting the Paris Agreement. We should also strongly encourage other countries and regions to follow suit.”
Just a while ago, an American billionaire and environmentalist Tom Steyer called Bitcoin a “huge user of electricity”. In his opinion, cryptos remain a substantial environmental threat due to their dependence on fossil fuels.
On the contrary, CEO of Ark Invest Katie Wood is confident that the first cryptocurrency will eventually become even more eco-friendly than the traditional financial services sector.
Yet another environmental dispute has broken out. Following Elon Musk and Tom Steyer, Swedish regulators raised the issue of environmental damage caused by crypto mining. The heads of the Financial Supervision Authority and the Environmental Protection Agency are now calling for a ban on mining Bitcoin and other cryptos using the Proof-of-Work algorithm all over the EU. The crypto community is still waiting for a brand new algorithm to come and save the day.
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The views, thoughts, and opinions expressed in this article belong solely to the author, and should not be taken as investment advice. Do your own research before taking any investment decisions.
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