The EU should prohibit proof-of-work crypto mining, an executive at the European securities watchdog has insisted. Coins relying on the energy-intensive method of minting pose a risk to efforts aimed at meeting climate change goals such as those set in the Paris Agreement, the regulator says.
Bitcoin Mining is now under attack in the EU for burning too much renewable energy
A high-ranking financial regulator has reiterated its call for an EU-wide ban on cryptocurrency mining based on the proof-of-work concept. The power-hungry model used in minting major cryptocurrencies like bitcoin – as well as ethereum at this point – has been blamed for using increasing amounts of renewable energy, which is said to have slowed the climate transition in d 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. This, according to the ESMA official, will lower its huge power consumption.
Thedéen, who is also the chief executive of the Swedish 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, named proof-of-work mining as the main reason for bitcoin’s high power consumption and launched the first call. to 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.
Cryptocurrency mining has been criticized for its growing impact on the environment. Last May, China – which at the time held the largest share of global hashrate – launched a crackdown on the industry following President Xi Jinping’s pledge to achieve carbon neutrality. Miners have worked to increase the proportion of renewable energy in the mix that powers their hardware. 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.
Mining companies have relocated to countries with developed wind and solar power generation capabilities, such as Sweden and Norway, which are considering supporting the Swedish proposal. Thedéen now warns that if the authorities do not intervene, a significant amount of renewable energy will be used to mint digital currencies instead of helping traditional services move away from coal-fired energy sources.
