Swedish authorities have called for an EU-wide ban on energy-intensive cryptocurrency mining, which they say threatens global warming targets under the Paris Agreement on climate change.
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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 cryptocurrencies such as Bitcoin and Ethereum had triggered an increase in energy consumption in the country amounting to “several hundred percent.”.
This cryptocurrency mining is increasingly relying on Sweden's renewable energy sources, which Thedéen and Risinge say are "urgently needed for the development of fossil-free steel, large-scale battery manufacturing and the electrification of our transport sector," as well as for other essential services.
The recent crackdown on cryptocurrency in China – which includes a complete ban on any activity related to the issuance or trading of virtual tokens or the operation of cryptocurrency-exchange businesses – has seen producers turn their attention elsewhere.
This includes the Nordic region, where prices and taxes are more favorable and there is an abundant supply of renewable energy to exploit.
The letter specifically calls for a Europe-wide ban on the crypto mining mechanism known as “proof of work,” which involves contributing computer processing power to solve mathematical puzzles on the network and validate transactions on the blockchain.
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A number of policy options are proposed by Thedéen and Risinge to curb energy-intensive cryptocurrency mining, including taxes on cryptocurrency production and better communication about its environmental impacts. However, they note that none of these options is a direct solution to the problem, especially “given the rapid growth and demand for crypto-assets.”.
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Therefore, the letter calls on the EU to introduce measures to stop crypto-mining production that uses energy-intensive methods and legislation that would prevent companies that trade and invest in crypto-assets from labeling themselves or their business as environmentally sustainable.
While this could lead to a relocation of cryptocurrency producers to countries with a more cryptocurrencies-friendly attitude but little or no access to renewable energy, Thedéen and Risinge say that “it is important that Sweden and the EU take the lead and set an example in order to maximize our chances of adhering to the Paris Agreement,” and they call on other global authorities to follow suit.
Information source: zdnet.com
