The EU should ban the energy-intensive mode of crypto mining, says the regulatory authority

A leading EU finance supervisory authority has again made demands for a block-wide "ban" of the main form of Bitcoin mining loudly and alarm because of the increasing proportion of renewable energies that are spent on crypto mining.

Erik Thedéen, deputy chairman of the European Securities and Market Authority, said the Financial Times that Bitcoin mining for his home country of Sweden has become a "national matter", and warned that cryptocurrencies are a risk of achieving the climate protection goals of the Paris Agreement.

Thedéen said that the European regulatory authorities should consider banning a mining method that is known as the "proof of work" and instead to move the industry to less energy-intensive "proof of stake" model in order to reduce the enormous electricity consumption of the sector.

Bitcoin and ether, the two largest cryptocurrencies according to volume, both rely on a proof-of-work model, in which all participants in the digital blockchain ledger transactions have to verify. Miners who use extensive data centers full of faster computers to solve complex puzzles are rewarded for the recording of transactions with newly shaped coins.

This requires significantly more energy than the proof-of-stake model, in which the number of parties that sign trades is much lower.

"The solution is to prohibit work evidence," said Thedéen, who is also general director of the Swedish financial services authority and chairman for sustainable finances of the International Organization IOSCO. "Proof of Stake has a significantly lower energy profile."

mining has become an extremely lucrative and competitive business, with the amount of computing power that is spent on the process, according to Blockchain.com at a record level. China banned the process in May, but the activities have scattered all over the world, and there are now several listed companies that concentrate on practice, such as Canada's Hut 8.

"We have to have a discussion about switching the industry to more efficient technology," said Thedéen, adding that he does not support a comprehensive ban on crypto.

"The financial industry and many large institutions are now active on the markets for cryptocurrencies, and they also have [Environmental, social and governance]," he added.

His comments were made after the Swedish authorities had brought the idea to ban this practice for the first time in November last year, whereby they found the increasing amount of renewable energy for cryptocurrencies and found that "the social benefit of crypto-assets is questionable".

"[We Call for] The EU is considering an EU-wide ban on the energy-intensive mining method proof-of-work," said the Swedish financial supervisory authority in November.

The digging of cryptocurrencies is increasingly criticized because of its effects on the environment. Practice accounts for 0.6 percent of the total energy consumption of the world and, according to data from the Cambridge Bitcoin Electricity Consumpt, burns more electricity than Norway annually.

In view of the increasing criticism and the ban in China, Miner have increased the proportion of renewable energies that you use for the operation of your computers and have penetrated into countries with a lot of wind and solar energy such as Sweden and Norway.

"Bitcoin is now a national problem for Sweden because a lot of renewable energy is spent on the mining," said Thedéen.

without intervention, he warned, would flow a considerable amount of renewable energy into the creation of Bitcoin units instead of using traditional services from coal-powered energy sources.

The Swedish supervisory authorities, citing estimates at the University of Cambridge, also found that the mining of a single Bitcoin unit consumes as much energy as driving a medium-sized electric car over 1.8 million kilometers.

"It would be irony if the wind power that is produced on Sweden's long coast would be devoted to Bitcoin mining," said Thedéen.

Ethereum, the second largest digital asset, has announced that it will migrate to the proof-of-stake model in June.