Should we limit bitcoin mining in Europe?

Swedish authorities have called for an EU-wide ban on energy-intensive cryptocurrency mining. According to them, these operations threaten the goals aimed at limiting global warming to 1.5 ° C under the 2015 Paris Agreement.

In an open letter to the European Union, Erik Thedéen, director of the Swedish Financial Supervisory Authority, and Björn Risinger, director of the Swedish environmental protection agency, warned that mining of cryptocurrencies such as Bitcoin and Ethereum had caused an increase in energy consumption in the country of “several hundred percent”.

This cryptocurrency mining is increasingly tapping into Sweden’s renewable energy sources, which Erik Thedéen and Björn Risinger say are “urgently needed for fossil-free steel development, gas battery manufacturing, scale and electrification. of our transport sector “, as well as other essential services.

44 trips around the world in an electric car for a bitcoin

China’s recent crackdown on cryptocurrencies, including a total ban on all activities related to issuing or trading virtual tokens or running cryptocurrency exchange businesses, has led producers to shift their attention elsewhere. . Especially the Nordic region, where prices and taxes are more favorable, and where there is an abundant supply of renewable energy to exploit.

“If we were to authorize the extensive exploitation of crypto assets in Sweden, the renewable energy at our disposal would run the risk of being insufficient to cover the necessary climate transition that we must make,” warn Erik Thedéen and Björn Risinger.

In a letter, they specifically call for a Europe-wide ban on the cryptocurrency mining mechanism known as ‘proof of work’, which involves providing computer processing power to solve mathematical puzzles on the network and validate transactions on the blockchain. On the Ethereum network, the computational efforts required to complete transactions are called “gas,” the cost of which is set by miners based on the supply and demand of the network. The more powerful the computer, the more likely it is that the miner will receive a coin.

But this process also requires a great deal of energy. According to Erik Thedéen and Björn Risinger, electricity consumption for bitcoin mining in Sweden now amounts to one terawatt hour (TWh) per year, which is the electricity needed to power 200,000 homes.

“Currently it is possible to run a mid-size electric car 1.8 million kilometers using the same energy that is needed to mine a single bitcoin,” they say. “It is the equivalent of 44 tours around the world. 900 bitcoins are mined every day. It is not a reasonable use of our renewable energy. “

What are the political options?

Erik Thedéen and Björn Risinger propose a number of policy options to curb energy-intensive cryptocurrency mining, including taxes on cryptocurrency production and better communication on its environmental impact. However, they note that none of these options are likely to solve the immediate problem, especially “given the rapid growth and demand for cryptoassets.”

Therefore, the letter calls on the EU to introduce measures to end the production of cryptocurrencies that use energy-intensive methods and to legislate to prevent companies that trade and invest in crypto assets from describing themselves or describing themselves. its activity as environmentally sustainable.

While this could lead cryptocurrency producers to move to countries with a more favorable position towards cryptocurrencies, but with little or no access to renewable energy sources, Erik Thedéen and Björn Risinger state that “it is important that Sweden and the EU show the way and the example to maximize our chances of respecting the Paris agreement ”, and ask other world authorities to follow suit.

“The ban on the proof-of-work mining method in the EU could be an important first step in a global move towards greater use of more energy-efficient cryptocurrency mining methods,” they add. “It would also mean that our renewable energy is used in the most efficient way possible to support the transition to climate neutrality. “

Source: .com

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