Posted on January 19, 2022 at 4:18 PMUpdated on January 19, 2022 at 18:57
Does Bitcoin mining threaten the achievement of the goals of the Paris Agreement? It all depends on the method. According to the vice-president of the European Securities and Markets Authority (Esma), Erik Thedéen, consideration should be given to banning the main method of bitcoin mining, based on “proof of work” (“proof of work”), too intensive in energy , to steer the industry toward the “proof of stake” model.
Erik Thedéen told the ‘Financial Times’ that bitcoin mining has become a ‘national problem’ for his home country of Sweden, warning that cryptocurrencies pose a risk to achieving the goals of the Paris Agreement on foreign exchange. climate.
Total ban in China
The two largest cryptocurrencies by volume, bitcoin and ethereum, are based on a “proof-of-work” model, requiring transactions to be verified by all participants in the blockchain’s digital ledger. In “proof of work” mining mode, miners use giant data centers to solve complex mathematical problems. They are then rewarded for recording transactions by automatically receiving crypto. An activity that has become very lucrative and competitive, which has caused the computing power dedicated to this process to skyrocket.
In “proof of stake” mining mode, owners simply pledge their tokens as collateral for a chance to validate blocks. They are then randomly selected to “mine” or validate a block and then receive their reward. A less competitive and more energy efficient system.
Other countries such as China, which completely banned mining on its territory last May, have already expressed concern about their energy consumption. Beijing had notably noted a link between the cryptocurrency mining boom and the rise of illegal coal mining in mines that had, however, been shut down.
Sweden is worried
Also at the head of the Swedish financial regulator, Erik Thedéen had already requested on behalf of the Swedish authorities the prohibition of this mining method last November. Sweden noted the increasing amount of renewable energy devoted to cryptocurrencies and considered the social benefit of crypto assets “questionable”.
“We need to have a discussion about how to change the industry to more efficient technology,” Erik Thedéen told the British daily, adding that he was not advocating a blanket ban on cryptocurrencies. “The financial industry and many large institutions are now active in the cryptocurrency markets and have responsibilities [environnementales, sociales et de gouvernance] “, he added.
Norway energy consumption
This is not the first time that Esma has warned about the environmental cost of bitcoin mining. In its September 2021 report on trends, risks and vulnerabilities, the institution had already raised concerns about the dizzying environmental cost of bitcoin mining “which could consume as much energy as Italy and the US and Saudi Arabia put together by 2024, If that is not the case”. under control,” he warned.
Crypto mining would already account for 0.6% of total energy consumption in the world today and consume as much electricity per year as Norway, according to the Cambridge Bitcoin Electricity Consumption Index. The Ethereum network has already announced that it will switch to “proof of stake” mode in June.
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