EU Regulator Seeks Proof-of-Work Ban Bitcoin Mining to Save Renewable Energy

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The European Union should ban the energy-intensive system used to mine Bitcoin, one of the bloc’s top financial regulators has said.

In an interview with the Financial Times, European Securities and Markets Authority (ESMA) Vice Chairman Erik Thedéen called for a block-wide ban on “proof of work” cryptocurrency mining. “, claiming that the energy consumption of the industry was becoming a “national problem”. ” in his native Sweden.

“Bitcoin is now a national issue for Sweden due to the amount of renewable energy that goes into mining,” Thedéen told the FT.

“It would be an irony if the wind power generated on Sweden’s long coastline was dedicated to Bitcoin mining,” he added.

Bitcoin now consumes 0.6% of the world’s electricity, according to figures from the Cambridge Bitcoin Electricity Consumption Index.

What is proof of work?

Bitcoin and Ether, the two largest cryptocurrencies, are minted through the proof-of-work system, which financially incentivizes miners to use ever more computing power – and therefore electricity – to validate blockchain transactions and win tokens.

Thedéen previously called for a ban on proof-of-work crypto mining in November last year, in his capacity as director of the Swedish Financial Supervisory Authority.

From April to August 2021, the energy consumption of Bitcoin mining operations in Sweden increased by “several hundred percent,” Thedéen said at the time.

In the interview published on Wednesday, the Swedish regulator stressed that it was not calling for a general ban on cryptocurrencies, but rather trying to promote a “discussion about the industry moving to a more effective”.

“The solution is to disallow proof of work,” he said.

One potential avenue to explore could be a move to “proof-of-stake” mining, Thedéen told the paper.

While proof-of-work encourages competition among miners to ensure network security, proof-of-mining is a less energy-intensive process where miners pledge their tokens against errors in the validation process.

Ether, the second-largest cryptocurrency by market capitalization, is expected to go proof-of-mining in the second half of this year.

Energy concerns

Growing concerns about the growing energy consumption of the crypto mining industry have already prompted governments to take action. Earlier this month, Kosovo banned cryptocurrency mining in a bid to tackle the country’s worst energy shortage in a decade.

In November, Norwegian authorities told Euronews Next that they would consider supporting a ban on proof of work and said the Nordic country was “considering potential policy measures” to address the challenges posed by crypto mining.

“Although crypto mining and its underlying technology may represent some possible long-term benefits, it is difficult to justify the extensive use of renewable energy today,” the Norwegian government minister told Euronews Next. Local and Regional Development, Bjørn Arild Gram.

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