A hot potato: The price of cryptocurrencies keeps on rising, and while that's good news for miners, it means more people jumping on the bandwagon, which equals more energy being spent on mining the likes of Bitcoin. Sweden considers the environmental impact of this activity so severe that it wants to ban it entirely in Europe.
Euronews reports that two directors of the Swedish Financial Supervisory Authority, Erik Thedéen and Bjorn Risinger, said that rising crypto mining in the country and the subsequent increase in energy usage threatens its ability to meet targets set out in the Paris Climate Agreement. Therefore, they suggest banning proof-of-work crypto mining across Europe, and for Sweden to prevent the establishment of new crypto mining operations and for companies that trade and invest in crypto assets to be prohibited from describing themselves as environmentally sustainable.
The pair said that the energy consumption of Bitcoin mining in Sweden went up by several hundred percent between April and August and now consumes the equivalent electricity of 200,000 households.
"Crypto-assets are a threat to the climate transition – energy-intensive mining should be banned," the regulators said in a statement. "The University of Cambridge and Digiconomist estimate that the two largest crypto-assets, Bitcoin and Ethereum, together use around twice as much electricity in one year as the whole of Sweden."
Sweden has relatively low electricity prices thanks to its focus on using renewable energy sources. Ironically, it's these low costs that are attracting miners and having an environmental impact. The problem has worsened since China declared all crypto illegal a few months ago, forcing miners to relocate elsewhere.
It's not just crypto mining that impacts the environment. The average NFT, which everyone seems to be embracing these days, has a carbon footprint equivalent to more than a month of electricity usage for the average person living in the European Union.
Not everyone agrees with the Swedish watchdog's assessment. Paris-based alternative investment firm Melanion Capital said (via Cointelegraph), "The claim that Bitcoin miners jeopardize the electricity network is completely misinformed."
"The absence of such a political counterbalance [for Bitcoin miners] should not be taken as an opportunity to implement measures rendering illegal an industry for its lack of defensive powers."