Why the European Union will ban cryptocurrency mining?
In a recent interview, Erik Thedéen, vice-president of the European Securities and Markets Authority, stated that bitcoin mining had evolved into a "national issue" in his country.
Following in the footsteps of China, the European Securities and Markets Authority (ESMA) has maintained its call for a ban on cryptocurrency mining, claiming that more and more renewable energy projects are being devoted to mining, complicating the energy crisis and preventing the green transition from taking place. Indeed, according to the Financial Times (in Swedish), Erik Thedéen, vice-president of the European Securities and Markets Authority, bitcoin mining has become a "national issue" in his country of origin, Sweden, and that cryptocurrency mining poses a threat to the achievement of the Paris Agreement's climate change goals.
Thedéen believes that European regulators should consider prohibiting the use of a mining method known as "proof of work" and instead encourage the sector to adopt a less energy-intensive proof of stake protocol in order to limit the massive amount of energy consumed by the industry.
Remember that both Bitcoin and Ether, the native token of Ethereum, are built on proof of work mining methods, as is the case with most cryptocurrencies.
According to Blockchain.com, mining is a tremendously profitable and competitive business, with the amount of processing power dedicated to the process reaching record levels.
China outlawed such activities in May, despite the fact that there are hundreds of mining businesses distributed over the globe.
In reality, some mining businesses, such as Canada's Hut 8, are now publicly traded on the stock exchange, including Hut 8.
According to Thedéen, "we need to have a dialogue about transitioning the sector to a more efficient technology."
In addition, he stated that "the financial industry and many significant investment institutions are now participating in the cryptocurrency markets and have duties [in terms of the environment, social responsibility, and governance].
According to estimations from the University of Cambridge, mining a bitcoin unit consumes the same amount of energy as driving a medium-sized electric car for 1.8 million kilometers, according to Swedish regulators who cited the University of Cambridge.
In Thedéen's opinion, "it would be comical if the wind energy generated along Sweden's vast coastline were to be used for bitcoin mining."
By fLEXI tEAM