Crypto-assets are a threat to the climate change transition, therefore energy-intensive mining should be banned. This is the conclusion of the director generals of both the Swedish Financial Supervisory Authority and the Swedish Environmental Protection Agency.
According to a statement released by the agencies, the most common method for producing cryptocurrencies requires enormous amounts of electricity and generates a large amount CO2 emissions. Crypto miners go where there is a great cheap supply of energy. They are also keen to use more renewable energy. According to the reports, they are also increasing their presence in the Nordic region, which includes Sweden.
“The two largest crypto-assets, Bitcoin and Ethereum, together use around twice as much electricity in one year as the whole of Sweden.”The University of Cambridge and Digiconomist
However, Sweden as a country needs the renewable energy targeted by crypto miners for the climate transition and local industrial usage. The increased use by crypto miners threatens the country’s ability to meet the Paris Agreement climate change targets. Therefore, according to the heads of these two important Swedish institutions, the government should urgently prohibit the energy-intensive mining of cryptocurrencies such as Bitcoin.
Both institutions also claim that the social benefits of crypto-assets are highly questionable. According to them, the consumer risks are very high, and cryptocurrencies are commonly used for criminal purposes such as money laundering, terrorist financing and ransomware payments.
The Swedish Financial Supervisory Authority and the Swedish Environmental Protection Agency, call for 3 things:
1. The EU to consider an EU-level ban on the energy-intensive mining method proof of work. There are other methods for mining crypto-assets, that could also be used for Bitcoin and Ethereum, that are estimated to reduce energy consumption by 99.95% with maintained functionality.
2. Sweden to meanwhile introduce measures that halt the continued establishment of crypto-mining production using energy-intensive methods.
3. That companies who trade and invest in crypto-assets, that were mined using the proof of work method, cannot be allowed to describe or market themselves or their activities as sustainable.