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EU regulator calls for ban on "proof-of-work" cryptocurrency mining
Erik Theden, vice president of the European Securities and Markets Authority, has renewed his calls for a widespread ban on bitcoin mining. In an interview with the Financial Times, Thedéen raised concerns about the increasing use of renewable energy dedicated to bitcoin mining. The regulator described bitcoin mining as a national threat to his native Sweden and warned that cryptocurrency mining poses a risk to achieving the climate change goals enshrined in the Paris Agreement. As a result, Theden called on EU regulators to consider banning a mining method considered "proof of work," which is primarily used to mine bitcoin and a few other cryptocurrencies. Instead, he advocates the use of "proof of stake" as a more energy-efficient alternative.
Both Bitcoin and Ether rely on the "proof-of-work" method, which requires all participants in the blockchain network to verify transactions. Miners who use sprawling data centers and fast computers to solve complex puzzles are rewarded for recording transactions with newly minted coins. However, this model requires a greater amount of energy than the "proof of stake" method.
Theden said, "The solution is to ban proof of stake. Proof of stake has a far lower energy profile."
Last November, Melanion Capital, a Paris-based alternative investment firm, echoed the same sentiment, describing 'proof-of-work' mining as "completely misinformed." However, the investment firm justified this by the decentralised nature of bitcoin. There is no lobby group to defend its interests, which "should not be taken as an opportunity to implement measures making the industry illegal for its lack of defensive powers."
Can bitcoin green mining become more sustainable?
Theden's announcement comes as bitcoin mining has recently faced strong resistance from various stakeholders. Last May, electric car maker Tesla stopped accepting bitcoin payments, citing the huge amounts of electricity needed to mine the cryptocurrency.
A few weeks later, China banned the mining of cryptocurrencies such as bitcoin and ethereum in the region. In September, China renewed a new ban as part of its efforts to eliminate crypto-currency mining operations from the country. Meng Wei, the spokesperson for China's National Development and Reform Commission, a macroeconomic planning agency, said crypto-currency mining was an extremely harmful industry that jeopardised China's pursuit of carbon neutrality.
However, Elon Musk later hinted at a new sign of hope by stating that Tesla would rethink accepting bitcoin payments once 50 percent of the grid's power comes from renewable sources. At this point, unlike Theden, most critics have no problem with the use of clean energy in bitcoin mining.
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