Proof of Work Endangers Paris Climate Agreement, Swedish Financial Supervisory Authority
- According to the Swedish Financial Supervisory Authority, Bitcoin and Ethereum mining or the proof of work endangers Paris Climate Agreement.
- Cryptocurrency mining consumes a lot of electricity. Thus some miners have switched to sustainable energy sources in the face of mounting criticism.
- To alleviate the problems created by the proof of work mining approach, policy actions are necessary. Both Sweden and the EU must put their renewable energy to the best possible use to benefit society.
- Sweden needs the renewable energy pursued by crypto-asset producers for the climate transition of the essential systems, and greater use by miners jeopardises the capacity to achieve the Paris Agreement’s goals.
The most prevalent way of creating crypto-assets necessitates massive quantities of power and produces significant CO2 emissions. Consequently, Crypto-asset developers are eager to utilise more renewable energy, and their presence in the Nordic area is growing.
Finansinspektionen, Sweden’s financial regulatory organisation, has asked for a ban on crypto mining, claiming that cryptocurrencies threaten the environment.
“Sweden needs the renewable energy targeted by crypto assets by crypto-asset producers for the climate transition of our essential services, and increased use by miners threatens our ability to meet the Paris Agreement,” the regulator commented.
The value of crypto-assets in terms of societal impact is debatable. The Swedish Financial Supervisory Authority, like other international bodies like the International Monetary Fund and the Federal Reserve Board of the United States, believes that there are some characteristics of crypto-assets that are problematic.
“Energy-intensive mining of crypto assets should therefore be prohibited,” the regulator stated, citing the Swedish Environmental Protection Agency as a supporter of this position.
This announcement comes as the globe’s environment activists and defenders pressed governments worldwide to act fast and with increased urgency in the face of climate change at the COP26 summit.
Crypto-assets are often utilised for illegal objectives such as money laundering, terrorist financing, and ransomware payments, posing significant consumer dangers. Crypto-assets also have a substantial detrimental influence on the environment since mining produces massive greenhouse gases and curtails the critically needed climate transition.
Swedish mining scenario
Sweden has a lot of renewable energy, but there’s only so much of it, and Sweden’s regulator isn’t in a rush to put cryptocurrency ahead of essential services.
Although the Swedish regulator has a negative outlook about crypto assets, there is plenty of evidence—from terrorist groups to money launderers in downtown Moscow—that the dark side of crypto is still alive and thriving.
If Sweden allows substantial crypto-asset mining, there is a possibility that the renewable energy available to the country will not be adequate to support the essential climate shift. This energy is critical for the development of fossil-free steel, large-scale battery manufacture, and transportation electrification. According to Cambridge University estimations, it is presently possible to drive a mid-size electric car 1.8 million kilometres with the same amount of energy required to produce one bitcoin. This is the same as doing forty-four laps around the world. Every day, 900 bitcoins are mined. This is not an appropriate use of their renewable energy sources.
Henceforth there is a need for:
- The EU’s consideration of a ban on the energy-intensive mining method proof of work at the EU level.
- Sweden is required to take steps in the meantime to stop the ongoing use of energy-intensive techniques for crypto-mining.
- Companies that trade and invest in crypto-assets mined via the proof of work technique are not permitted to promote or sell themselves or their operations as sustainable.