In an interview for Financial Times, the Vice Chairman of the European Securities and Markets Authority (ESMA) Erik Thedeen, called for a ban on bitcoin mining. Specifically, he expressed his concerns that crypto mining contributes to climate change and called for a shift to a more efficient technology called Proof-of-Stake.
Proof-of-Stake model is less energy-intensive as users’ right to record transactions depends on the “stake” they have in the network. The Proof-of-Work model requires miners to solve complicated mathematical problems to record transactions on the blockchain and get new coins. Currently, Bitcoin and Ether use the PoW model, but Ether is likely to switch to PoS sometime in 2022.
Mr. Thedeen highlighted that he was not calling for a total ban on crypto mining, but the latter is now a serious problem in Sweden and all 27 member states needed to consider the adoption of the PoS method to help authorities meet the climate obligations. His proposal comes after China’s decision to shut crypto currency transactions. Back in 2021, that decision threw the industry into turmoil as China has long been an epicenter of the crypto mining segment.
As a result, mining companies had to find new locations to continue their operations. However, the EU countries were not quite ready to become crypto mining hubs. Sweden, for example, had to provide huge electricity resources that would be enough to meet the needs of 200,000 households. Namely, pollution and environmental issues are the main reasons why a dozen of countries, including Bangladesh, Morocco, Turkey, and Egypt, have banned or restricted crypto mining.