Swedish regulators want Europe to Ban "Energy Intensive" Cryptocurrency Mining
The energy used to create cryptocurrencies could be better spent elsewhere
Published: 24th November 2021 | Source: Euro News |
"Proof of Work" Cryptocurrencies are too "Energy-Intensive" - Says Swedish Authorities
Sweden's increased power demand due to cryptocurrency mining is threatening Sweden's ability to meet its obligations under the Paris Climate Agreement, and other nations with cheap power are undoubtedly facing similar issues.
With China cracking down on cryptocurrencies and cryptocurrency mining, many miners have moved their operations to the Nordic countries. This is placing strain on Sweden's power grid and is preventing the nation from decreasing its use of non-renewable power. Sweden's renewable energy is getting diverted away from industrial, transport and other domestic users and into cryptocurrencies like Bitcoin and Ethereum. Swedish regulators want this to stop.
In an open letter, Sweden's financial and environmental regulators have called on Sweden to "halt the establishment" of new cryptocurrency mining operations and to prevent businesses that trade or invest in crypto assets from being described as environmentally sustainable. Additionally, they have called on the EU to ban "proof of work" cryptocurrency mining.
What is "Proof of Work"
The "Proof of Work" system behind most modern cryptocurrencies is unsustainable, but why? The simple fact of the matter is that they will inevitably consume incredible amounts of power to sustain themselves, with Bitcoin being a prime example of this.
Proof of Work systems require computers to solve complex mathematical problems to validate transactions on cryptocurrency networks. These calculations get more difficult as more transactions as more blocks are validated, and new transactions are made. This means that more computational horsepower, and energy, is required to keep these proof of work networks operational over time.
Swedish regulators have claimed that an electric car can travel 1.8 million miles, or 44 laps around the world, using the same energy that is consumed to create a single Bitcoin. Every day, around 900 bitcoins are mined/created. Sweden states that this is a poor use of renewable energy.
Why Proof of Work Cryptocurrency Mining Needs to be Stopped
Stopping Proof of Work cryptocurrency mining would not only prevent a lot of electricity use, but it will also prevent a lot of future electronics waste and alleviate some of the strain that the semiconductor industry is under.
The renewable power that is used to power some cryptocurrency mining operations can be used elsewhere, and the fossil fuel power plants that have been recommissioned to meet the power demands of cryptocurrency miners can be closed down once more. Nobody can legitimately argue that the power used to mine cryptocurrencies is not contributing to the world's greenhouse gas emissions. Should the electricity use of cryptocurrency miners be allowed to grow, it will become harder for nations to transition fully to renewable power.
China has declared cryptocurrencies illegal, and perhaps it is time for Europe and the world to start considering similar actions.
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