Rising prices of cryptocurrencies have attracted many companies to mining this year as well. However, with increasing cryptocurrency production, Sweden warns the EU of the problem of reaching the Paris Climate Change Agreement. It is the Swedish regulators who are calling for a ban on a “proof-of-work” system in the extraction of cryptocurrencies, informs Cointelegraph.
The Nordic country opposes bitcoin
Sweden is trying to base its new proposal on allegations of inefficient use of renewable energy sources in the country. According to the Swedish Financial Supervisory Authority and the Swedish Environmental Protection Agency, this could prevent the achievement of its climate goals.
The country’s energy consumption was to increase by “hundreds of percent” from April to August this year, and bitcoin mining is currently expected to consume more than 200,000 households there.
This year alone, energy consumption was expected to rise to an annual average of 1 TWh. It is the “proof-of-work” system that Sweden sees as a major obstacle in the extraction of cryptocurrencies and the achievement of its climate goals.
In addition, the country is trying to enforce not only a ban on cryptocurrency mining, but also a ban on new mining operations. Cryptome companies should then be banned from labeling their business as “environmentally sustainable”. Norway could also support the proposal, he said Coindesk.
However, Sweden may not demand a total ban on cryptocurrency mining, as China did recently, but its requirements may encourage the industry to use other mining methods that are less energy-intensive. According to Swedish regulators, another way of extracting cryptocurrencies would be up to 99% more energy efficient. However, the regulators did not name a specific solution.
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The mining ban will not solve the emissions problem, it will move it to other countries
Sweden’s challenge, Vattenfall Energy Company, which advocates bitcoin mining, has opposed Sweden’s challenge. According to her, bitcoin is the ideal “tool” that helps electricity generators cope with some of the challenging challenges they face. Henrik Juhlin, director of physical management at the company, told the Swedish broadcaster SVT that bitcoin mining helps to balance the load on the electricity grid, informs Bitcoin.com.
According to him, this method of bitcoin extraction is a reliable way for balancing in the network at a time when surplus electricity is generated. The Swedish electricity grid increases the share of energy produced by renewable sources, but the generation of such “green” electricity also depends on many factors that man cannot influence. It is the extraction of bitcoin that then serves as a “buffer” at the time of overload.
However, Juhlin also warned that banning proof-of-work cryptocurrency would not actually help reduce emissions, as miners would only move to other countries, as they did after the ban in China.
Following these events in the Far East, the center of cryptocurrency miners became the United States, where, according to NBCNews the share of global hashrat reached 35.4% at the end of August. Other large mining centers are then located in Russia and Kazakhstan.
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For bitcoin, he has no one to fight against governments
Melanion Capital, a Paris-based investment firm known for its bitcoin ETFs, also responded to Sweden’s proposal, responding to Swedish regulators’ claims as “completely misinformation”. The company also pointed to a model that Texas set for bitcoin miners.
In this US state, instead of banning, miners have decided to welcome renewable energy production and reduce energy waste, creating a permanent source of burden for volatile hydro and wind power sources.
Melanion Capital also noted that bitcoin, due to its decentralized operation, has no lobby to fight against world powers and government proposals like in Sweden.