Swedish regulators restricting crypto mining in the European Union


Erik Tedeen, the head of the Swedish Financial Conduct Authority, and Bjorn Reisinger, the head of the Environmental Protection Agency, released a statement calling for a ban on mining cryptocurrency with the Proof-of-Work (PoW) algorithm in the European Union.
As of now, up to 120 million tons of carbon dioxide are
released into the atmosphere from the extraction of digital assets each year,
according to officials.
This could prevent the country and the EU from complying
with the Paris climate agreement, as per Tedeen and Reisinger.
To confirm transactions and create new blocks, the
Proof-of-Work (PoW) method is used. Miners compete with each other using PoW to
confirm transactions on the network in exchange for a reward. PoW is currently
used by Bitcoin, Ethereum, Litecoin, Dogecoin, Monero, and other
cryptocurrencies.
According to the University of Cambridge and
Digiconomist, the two most popular cryptocurrencies, Bitcoin and Ethereum, use
nearly twice as much electricity in a year as the entire Swedish country. This
is due to the fact that the crypto mining process necessitates proof of work.
The electricity demand is increasing as the number of competing crypto miners
grows.
In an article, officials stated: “If we were to allow
extensive mining of crypto-assets in Sweden, there is a risk that the renewable
energy available to us will be insufficient to cover the required climate
transition that we need to make.”
The transition of Sweden's critical services to a
low-carbon future requires the renewable energy sought by crypto-asset
producers in order to achieve the Paris Agreement.
Crypto-asset mining, which authorities say consumes a lot of energy, should therefore be banned. They further assert that a global move towards more energy-efficient crypto mining, the EU's ban on proof of work mining, might serve as an important first step.

Pavan A
CBW - External Analyst
INDIA