Cryptocurrencies like Bitcoin are 'apolitical' says financial expert
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Cryptocurrency mining is estimated to release millions of tonnes of carbon dioxide (CO2) into the atmosphere, largely fulled by the dirty fossil fuel industry. According to the Swedish Financial Supervisory Authority (FCA), the combined energy use of bitcoin and ethereum – the world’s two biggest crypto assets – is about twice as much electricity as the whole of Sweden. Senior members of the FCA and Swedish Environmental Protection Agency (EPA) have now called for a crackdown on crypto mining, warning the processes involved in the creation of digital tokens has a “negative impact” on the climate and the global transition to net zero.
In a note published last week, the FCA said: “Crypto-production’s high energy consumption is due to its mining process, which is called proof of work.
“Anyone who wants to mine assets competes to solve an encryption puzzle, and the winner receives new crypto-assets as a reward.
“The only way to solve the puzzle is by repeatedly running computer programmes that guess the right answer.”
However, when a large number of crypto miners work on the process simultaneously, the demand for electricity soars.
The process is further compounded by the fact the “puzzles” get harder and more process-intensive the more bitcoin are mined.
And as the price of bitcoin rises – £47,515.32 at 2.43pm on Friday – more people are incentivised to join the process, further driving up energy usage and emissions.
When bitcoin first emerged in 2009, early adopters were able to mine the token with simple rigs in their homes.
Today, entire warehouses full of mining rigs are being built to keep the mining process going.
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The FCA said: “We see clearly that the more expensive Bitcoin becomes, the more emissions it generates.”
According to the Swedish regulators, it is now possible to drive a mid-sized electric car some 1.1 million miles (1.8 million km) on the amount of energy it takes to mine a single bitcoin – the equivalent of completing 44 laps around the planet.
It is estimated 900 bitcoin are mined every single day, which the FCA claimed is “not a reasonable use of our renewable energy”.
The regulator added: “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.”
The call to ban crypto mining in the EU was welcomed by software engineer Stephen Diehl, who see a blanket ban as the right step towards tackling the climate crisis.
Under the terms of the 2015 Paris Climate Agreement, 192 nations and the EU have agreed to curb greenhouse emissions in a bid to curb global warming.
Mr Diehl tweeted: “An EU-wide ban on bitcoin mining is a great step towards ensuring the Paris Agreement promises.
“There’s no silver bullet on climate change, but banning pointlessly energy wasteful activities, that provide nothing but gambling, is a good preventative step.”
According to an analysis by the University of Cambridge, bitcoin mining consumes an estimated 121.36 terawatt hours a year.
This is more energy than the total consumption of Argentina, and more than Google, Apple, Facebook, and Microsoft.
Last September, the Columbia Climate School at Columbia University in New York warned “it is only getting worse”.
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