Swedish Regulators Demand a Ban on Crypto Mining in the EU

Concerned about the increasing energy requirements of cryptocurrency mining, Sweden’s environmental and economic regulators recently proposed an EU-wide ban on proof-of-work coin minting. Swedish officials believe that this will encourage a shift toward more energy-efficient bitcoin mining while also supporting Sweden’s and Europe’s transition to climate neutrality. However, a state-owned power company warns that the restrictions could have a negative impact on global carbon pollution.

The rising value of crypto assets attracts more companies to compete to solve the encryption puzzle at the heart of cryptocurrency mining, while the proof-of-work method is primarily responsible for its high power consumption. Erik Thedéen and Björn Risinger, directors general of Sweden‘s Financial Supervisory Authority and Environmental Protection Agency, made the remarks in a joint declaration.

The two authorities recently issued a call for the European Union to prohibit energy-intensive mining of cryptocurrencies, citing a variety of concerns, including the relocation of miners to other destinations following China’s crackdown. The Nordic region’s appetite for renewable energy, for example, could jeopardize the transition to climate neutrality and efforts to meet the Paris Agreement goals.

The government executives cite various estimates emphasizing the power-hungry nature of crypto mining, such as the claim that Bitcoin and Ethereum use roughly twice as much electricity as Sweden, or that a mid-size electric car can be driven 1.8 million kilometers with the energy burned to mint a single bitcoin. They also point out:

Our conclusion is that policy measures are required to address the harms caused by the proof-of-work mining method. It is important that both Sweden and the EU can use our renewable energy where it provides the greatest benefit for society as a whole.

According to Thedéen and Risinger, governments have several policy options to address the issue. “Sweden and other countries, for example, could levy a tax on the energy-intensive production of bitcoin.” Another option is to “communicate more widely about the climate issues associated with crypto-assets in the hope that this will lead to both producers and investors demanding a shift to mining methods that require less energy,” they add.

However, as demand for crypto assets continues to rise at a rapid pace, Swedish officials are concerned that neither of these measures will be sufficient to limit environmental damage. “Emissions must cease immediately, and renewable energy must be used for the climate transition of essential services.”

Patrick

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