ESMA Vice-Chair Calls EU To Ban Proof-of-Work Mining Over Energy Use
Erik Thedéen, Vice-Chair for European Securities and Markets Authority (ESMA) – a leading EU regulator, suggested for banning Proof-of-Work mining due to concerns over its energy consumption.
According to Financial Times report, Thedéen said that Proof-of-Work mining is a contributor to climate change, and “the solution is to ban Proof-of-Work.”
He did not suggest to ban cryptocurrencies, but focused on the industry to move towards more energy-efficient Proof-of-Stake blockchain validation method.
The two largest digital assets by market capitalization – Bitcoin and Ethereum – rely on the proof-of-work mining technology. However, Ethereum is on its way to upgrading the network to Ethereum 2.0 as the transition is expected to happen this summer. Following the development, the second-largest blockchain protocol will start utilizing the proof-of-stake method.
Thedéen, who is also the director-general of Sweden’s Financial Services Authority and chair of sustainable finance for the International Organization for Securities Commissions, has called cryptocurrency mining a “national issue” for Sweden, as miners started to relocate to there to source power more sustainably.
Last November, Thedéen, alongside the director-general of the Swedish Environmental Protection Agency Björn Risinger, in a similar manner called for the ban of energy-intensive crypto mining because, even if conducted using sustainable resources, it shifts resources away from other, more crucial activities, according to him.
In their November report, the directors-general said that “the social benefit of crypto-assets is questionable” and cited various troubling statistics on the energy usage of Proof-of-Work, including the calculation that the carbon footprint of Bitcoin and Ethereum combined is equal to 100 million round-trip flights between Sweden and Thailand each year.
Thedéen explained:
“We need to have a discussion about shifting the industry to a more efficient technology. The financial industry and a lot of large institutions are now active in cryptocurrency markets and they have responsibilities.”
The energy consumption of the Bitcoin network was one of the widely discussed issues in 2021, with Elon Musk, Jack Dorsey, and Michael Saylor all participating in the debate. Tesla even dropped the Bitcoin payment option due to the Bitcoin network’s high energy consumption.
China outrightly banned mining. Unlike Thedéen, though, most of the opponents had no objections to the use of clean energy up until recently. Tesla would reconsider introducing a Bitcoin payment option if 50% of the Bitcoin network’s energy comes from renewable sources, according to Musk.
