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Swedish Financial Supervisory Authority wants to ban cryptomining

by Patricia

Financial experts write that the use of renewable energy for Bitcoin is problematic because it is needed elsewhere.

The Swedish Financial Supervisory Authority (Financial Inspectorates) has published an opinion on the mining of cryptocurrencies. In it, the authority concludes that mining currencies such as Bitcoin or Ethereum could lead to Sweden being unable to meet its climate targets. They recommend a ban on proof-of-work mining.

Mining cryptocurrencies with proof-of-work mechanisms requires enormous amounts of electricity. It is often argued by Bitcoin advocates that cryptocurrencies can be climate-friendly by using renewable energy or that they could even help with the energy transition. But as Swedish financial experts explain, it is the use of renewable electricity for cryptomining that could become a problem for the country.

Discussion about the climate damage caused by Bitcoin and the ban on Bitcoin trading in China have led miners to look for new locations – and have already found some in the northern regions of Scandinavia. The Swedish Financial Supervisory Authority estimates that electricity consumption from cryptomining in Sweden is currently around one terawatt hour per year. The total electricity consumption in Sweden is currently about 140 terawatt hours.

Renewable electricity is needed for fossil-free steel and e-mobility

“If we were to allow extensive mining of crypto-assets in Sweden, there is a risk that the renewable energy available to us would not be sufficient to cover the necessary climate change we need to accomplish,” the tax authority writes in its statement. “This energy is urgently needed for the development of fossil-free steel, large-scale battery manufacturing and the electrification of our transport sector. “

In plain language, the renewable energy that Sweden has in large quantities is needed for more important things. For example, Sweden has very ambitious plans to convert its steel industry to hydrogen-based direct reduction plants. This requires large amounts of electricity.

The financial experts also doubt that cryptocurrencies have socially positive effects: “Consumer risks are significant and crypto assets are often used for criminal purposes such as money laundering, terrorist financing and ransomware payments.”

The authority recommends that mining of cryptocurrencies with proof-of-work mechanisms is best banned across the EU. Other consensus mechanisms that do not require high power consumption should remain allowed as an alternative. Pending EU regulation, the tax authority recommends that Sweden stop the expansion of crypto-mining in its own country by taking appropriate measures. Furthermore, it is recommended that crypto products obtained by means of proof of work should not be advertised as sustainable.

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