Sweden has proposed a total ban on Bitcoin mining. What’s the problem?
Finansinspektionen, Sweden’s financial watchdog, has called for a ban on cryptocurrency mining, calling cryptocurrencies a threat to the climate. According to the regulator, Bitcoin mining requires too much electricity, much of which is produced by environmentally harmful power plants. Under such conditions, the damage to Sweden’s environment will allegedly increase every year unless government authorities take action to curb the miners’ business. We tell you more about what is happening.
Note that criticism of Bitcoin mining has been more than plentiful of late. In particular, last week Billionaire Tom Steyer called BTC almost the main threat to the environment. According to him, mining the cryptocurrency consumes too much energy, much of which is generated from non-renewable sources and pollutes the environment. Read more about the entrepreneur's point of view in a separate article.
What is Bitcoin being criticised for?
Here is a quote from the regulator’s address published by the news outlet Decrypt. In the rejoinder, officials share their concerns about the innovative field of cryptocurrencies and blockchain.
Sweden needs renewable energy to transform its energy sector. Much of it is used by cryptocurrency miners, which threatens our ability to comply with the Paris Agreement. Thus, the mining of digital assets should be banned.
The quote refers to the Paris climate agreement adopted in 2015. This international treaty aims to reduce the emission of harmful gases into the atmosphere that contribute to climate change. The main goal is to keep the average temperature on the planet from rising to reduce the effects of melting glaciers and rising water levels.
Bitcoin network energy consumption dynamics this year
As you can see, Swedish regulators have taken an extremely negative stance on the crypto market. The country has plenty of renewable energy sources, but miners are consuming an increasing share of the resource’s output. In other words, the demand of all other consumers cannot be met right now by green, environmentally friendly power plants.
According to Digiconomist platform founder Alex de Vries, even the popularization of green electricity among miners does not solve all global problems. Here is the expert’s rejoinder, in which he talks about the fallacy of this approach.
I have long insisted that the planet’s resources cannot be wasted sustainably. The use of renewable energy sources by miners does not solve the problem globally.
And so such actions will not tentatively change the situation. Accordingly, officials and others need to look for a different approach and at the same time stop criticising the digital asset niche.
Comparisons of cryptocurrency energy consumption with some countries
Cryptocurrency mining also has another problem – electronic waste. The business of mining cryptocurrencies requires constant upgrading of equipment, as older versions of ASIC miners gradually bring in less money amid the increasing complexity of mining. Consequently, these devices cannot be used in any other business and are scrapped.
It should be noted that what is happening to ASIC miners is indeed following the above pattern. In this regard, some cryptocurrency enthusiasts prefer to mine exclusively on video cards, because they can then be sold to gaming enthusiasts. In addition, the new payout system on the 2Miners pool allows you to earn bitcoins with the card automatically. In this case, the pool exchanges the minted ETH to BTCs and sends them to a specified wallet. Accordingly, there is a double benefit here for Bitcoin connoisseurs.
Cryptocurrencies on the map
Finansinspektionen has proposed three solutions to the problem. The first is a complete ban on mining in the European Union. The second, which applies specifically to Sweden, suggests limiting the establishment of new mining centres regardless of the EU decision. Finally, the third is to restrict the activities of cryptocompanies and firms that invest their capital in mining.
We believe that any of these scenarios could have a negative impact on the crypto market. Yet in May, after China banned Bitcoin mining altogether, the market experienced a significant drop. In this case, though, it is important to note that Sweden’s share of Bitcoin mining and cryptocurrency mining in general is very far from the recent scale of China. Therefore, the only ones likely to suffer here are local miners who will be affected by the restrictions – if there are any. That said, the coin niche as a whole is unlikely to have anything to fear.
We believe that such actions by Swedish regulators will hardly affect the stability and popularity of the cryptocurrency niche. Today, the coin market seems to be very stable and powerful, so possible restrictions on mining of the main coin in one country are unlikely to affect the situation in any way.
What do you think about it? Share your opinion in our millionaires’ cryptochat. There we will talk about other important topics regarding digital currencies.
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