The Swedish officials believe this would encourage a move towards a more energy-efficient extraction of bitcoin while supporting the transition towards climate neutrality in Sweden and Europe.
The rising value of crypto assets attracts more businesses to join the competition to solve the encryption puzzle at the core of cryptocurrency mining while the proof-of-work method is the main reason for its high energy consumption.
The two officials have recently issued a call for the prohibition of energy-intensive mining of digital currencies across the European Union, citing various concerns including the migration of miners to other destinations after China’s crackdown.
Another option is to communicate more widely around the climate problems related to crypto-assets, in the hope that this will lead to both producers and investors demanding a shift to mining methods that require less energy,” they elaborate.
They also propose to prohibit companies from trading and investing in crypto assets mined with a proof-of-work process to advertise themselves and their activities as sustainable.
Such steps could encourage crypto miners to relocate to other countries and increase global carbon emissions anyway, the authors of the proposal have admitted.
According to the statement published by Finansinspektionen, electricity consumption in Sweden’s bitcoin mining sector has increased significantly, already reaching 1 TWh annually.
Henrik Juhlin, head of Physical Power Management at Vattenfall, told the Swedish public broadcaster SVT that mining has the potential to balance loads on electrical grids.
Wind and solar power generation depend on factors that are beyond human control and consumption by crypto farms can play the role of a buffer at times when there is a surplus of available electricity.
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