Bitcoin undesirable: Swedish financial regulator wants to ban proof-of-work mining in the EU

The Swedish “Finansinspektiven” sees great risks from the most common method of producing crypto assets and is supported by the Swedish Environmental Protection Agency. The authorities observe that their country is increasingly becoming the focus of miners who are migrating from other countries.

Due to the increased focus on carbon dioxide emissions and in view of the more strictly controlled Bitcoin ban in China, more and more crypto producers are coming to the The idea of ​​using renewable energies for mining, so the Swedes in an official statement. These crypto miners are now turning their attention to the Nordic region because electricity prices are low there, taxes for mining activities are cheap and there is also good access to renewable energy.

It has already been observed that crypto producers are settling in northern Sweden. Between April and August 2021, electricity consumption for Bitcoin mining alone in Sweden increased by several hundred percent and now amounts to 1 terawatt hour per year. That would correspond to the electricity consumption of 200,000 Swedish households.

No Renewable energy left over – Sweden needs electricity itself

Sweden needs that from However, the crypto miners themselves claimed renewable energy to ensure the desired energy transition in their basic infrastructure. Last but not least, the steadily increasing use of energy by miners endangers compliance with the Paris Agreement , there is a risk that the available renewable energy will not be sufficient to cope with the necessary energy transition. The energy available in Sweden is urgently needed for the development of fossil-free steel, the production of batteries on a large scale and the electrification of the transport sector.

According to estimates by the University of Cambridge, a medium-sized electric car could currently drive 1.8 million kilometers with the same energy that is needed to mine a single bitcoin. That would be the equivalent of forty-four laps around the globe. 900 bitcoins would be generated every day. That is “no sensible use of our renewable energies”. Therefore, the General Directors of the Swedish Financial Supervisory Authority and the Environmental Protection Agency agree: The energy-intensive mining of crypto assets should be banned.

The authorities provide the following requirements:

• The European Union should consider banning the energy-intensive mining method proof-of-work. There would be other methods of mining crypto assets that could also be used for Bitcoin and Ethereum. In this way, the energy consumption could be reduced by an estimated 99.95 percent with the same functionality.

Until an EU ban, Sweden should lead the way and take measures in its own country that stop the further establishment of crypto mining with energy-intensive methods.

• Companies that trade in and invest in crypto assets that come with the proof-of -Work method, should no longer describe themselves or their activities as sustainable or be allowed to market them.

It is quite clear to the authorities that such measures can lead to crypto miners relocating to countries in which higher carbon emissions could then be the result. However, it is important that Sweden and the EU lead by example. Other countries and regions should be “strongly encouraged to follow this example”.

of work method in the EU. Because that could pave the way for the greater use of more energy-efficient crypto mining methods. But that is secondary. It is more important that renewable energies in Sweden are used as efficiently as possible in order to support the transition to climate neutrality.

The authorities are holding softer political measures for consistently unsuitable. Sweden and other countries could introduce a tax on the energy-intensive production of Bitcoin, for example. Another option would be to communicate the climate issues related to cryptocurrencies more broadly in the hope that this will lead to both producers and investors demanding a switch to mining methods that require less energy.

However, both mining activity and the demand for crypto assets are growing rapidly. As a result, environmental damage rose too quickly to wait for such measures to take effect. Rather, “the emissions should be stopped here and now”.