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The European Union should consider banning the more energy-intensive method of cryptocurrency mining, as using a lot of energy undermines the bloc’s climate goals, the vice-chair of the European Securities and Markets Authority (ESMA), Erik Thedéen, told the Financial Times.
Crypto mining has become a lucrative business, but its mining method “proof of work” consumes a lot of energy, which ultimately has officials and analysts question the social benefit of cryptocurrencies.
“We need to have a discussion about shifting the industry to a more efficient technology,” Thedéen, a Swedish national and director general of the Swedish Financial Supervisory Authority, told FT.
Thedéen, however, underlined that he was not proposing a discussion about totally banning crypto mining.
“The solution is to ban proof of work,” the vice-chair of ESMA told FT, adding that “Proof of stake has a significantly lower energy profile.”
The rise in the energy-intensive mining of Bitcoin and other cryptocurrencies comes at a time of record-high energy and power prices in Europe, which has been struggling for months with low natural gas stocks, low supply of gas from Russia, and, at times, low wind speeds, necessitating more fossil fuels to generate electricity.
Two months ago, Sweden’s authorities, including the Swedish Financial Supervisory Authority, called for an EU-wide ban on the proof of work method of crypto mining, arguing that the surge in energy consumption threatens Sweden’s chances of meeting its goals and obligations under the Paris Agreement.
Sweden’s neighbor Norway, which is not an EU member, could back the Swedish proposal for a ban on the energy-intensive method of crypto mining. Bjørn Arild Gram, Norway’s Minister of Local Government and Regional Development, told Euronews in November.
“Although crypto mining and its underlying technology might represent some possible benefits in the long run, it is difficult to justify the extensive use of renewable energy today,” Gram said.
Sweden, Norway, and Iceland are popular with crypto miners, especially after the Chinese crackdown on cryptocurrencies.
By Charles Kennedy for Oilprice.com
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Charles is a writer for Oilprice.com