EU will ban Bitcoin mining in near soon?
EU will ban Bitcoin mining in near soon?
Thedéen, vice-president of the European Securities and Markets Authority, warned that it would be ironic that large amounts of renewable energy would be used for bitcoin mining without intervention.
Following China’s ban on virtual currency “mining” last year, EU regulators are also calling for a ban on energy-intensive crypto mining models.
The EU’s top financial regulator has renewed its call for a ban on the main mode of bitcoin mining across the EU, according to the Financial Times.
Erik Thedéen, vice-president of the European Securities and Markets Authority, said that bitcoin mining has become a “national problem” in Sweden, and warned that cryptocurrencies pose risks to meeting the climate change goals in the Paris Agreement.
Thedéen said European regulators should consider banning the “PoW” (Proof of Work) mining model and push the industry to move to a less energy-intensive “PoS” (Proof of Stake) model to reduce the industry’s heavy electricity use.
Swedish authorities warn that more and more renewable energy is being used for cryptocurrency mining
Currently, the two cryptocurrencies with the largest transaction volume, Bitcoin and Ethereum, are adopting the PoW model, which requires all participants in the digital ledger of the blockchain to verify transactions.
The biggest problem with this model is the huge energy consumption.
Taking Bitcoin as an example, since Bitcoin generates a block every 10 minutes and gives block producers certain rewards and transaction fees as incentives, “miners” who want to obtain high returns use all computing resources to conduct Uninterrupted hash operation, which results in a huge waste of energy.
According to Blockchain.com, cryptocurrency mining has become a lucrative and competitive business, with record levels of computing power dedicated to the process.
The Cambridge Bitcoin Electricity Consumption Index shows that Bitcoin mining accounts for 0.6% of the world’s total energy consumption, consuming more electricity than Norway every year.
“The solution is to disable PoW mode, the energy consumption profile of PoS mode is much lower,” Thedéen said. He is also Director General of the Swedish Financial Services Authority and Chairman of Sustainable Finance at the international organization Iosco.
The idea of banning the practice was first floated by Swedish authorities in November last year, noting that more and more renewable energy is being used for cryptocurrency mining, while stating that “the social benefits of cryptoassets are questionable.”
The Swedish regulator, citing estimates from the University of Cambridge, also noted that mining one unit of bitcoin consumes the same amount of energy as driving a medium-sized electric car 1.8 million kilometers.
It would be ironic, Thedéen warns, that without intervention, a lot of renewable energy will be used for bitcoin mining, rather than moving traditional services away from coal energy.
In the United States, lawmakers are also exploring the impact of the energy consumed by Bitcoin mining.
On Jan. 20, the U.S. Energy and Commerce Commission’s Subcommittee on Oversight and Investigations will hold a public hearing to explore the consequences of energy consumption generated by cryptocurrency mining operations, Coinphony reported.
Notably, Ethereum said it will move to a lower-energy PoS model in June, which allows users to earn the right to record transactions based on how much they invest in the network.
