ESMA Vice Chair calls upon the EU to ban Proof-of-Work crypto mining

Erik Thedéen, the Vice Chair of the European Securities and Markets Authority (ESMA), has proposed that the European Union (EU) ban crypto mining powered by Proof-of-Work (PoW) consensus mechanisms. A report unveiled this news earlier today, noting that Thedéen’s suggestion seeks to address the high energy requirements of crypto mining.

According to Thedéen, who is also the Director General of Finansinspektionen, Sweden’s financial services regulator, Bitcoin mining has become a national issue for Sweden. To this end, he called for the banning of PoW-based mining.

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He, however, clarified that he is not vouching for an outright ban on the digital asset industry. To show his support for crypto, he touted Proof-of-Stake (PoS) consensus models, saying they have a significantly lower energy profile.

Thedéen added,

We need to have a discussion about shifting the industry to a more efficient technology. The financial industry and a lot of large institutions are now active in cryptocurrency markets, and they have [environmental, social and governance] responsibilities.

ESG concerns continue mounting

Notably, Finansinspektionen previously called for a ban on energy-intensive crypto mining in November last year, arguing that the renewable energy Sweden produces can be better utilized in other industries. The regulator noted that crypto mining is increasingly targeting these renewable energy sources, threatening the nation’s ability to honour the Paris Agreement.

Reportedly, the Director Generals of the Swedish Financial Supervisory Authority and the Swedish Environmental Protection Agency agreed on prohibiting PoW mining. Moreover, Finansinspektionen noted that the crypto sector’s high energy demands do not match the benefits the sector offer society.

This news comes as cryptocurrencies like Bitcoin (BTC/USD) and Ethereum (ETH/USD) continue facing criticism for their high energy requirements and carbon emissions. While crypto enthusiasts claim the sector uses more renewable energy than any other industry, Sweden’s concerns prove that some people will always find fault with cryptos.

Apart from Finansinspektionen, Alex de Vries, the founder of Digiconomist, claims using renewable energy on crypto mining is a waste of precious power.

Vries noted,

I’ve been saying for a long time you cannot sustainably waste resources—using renewables for crypto mining is no solution.

With ETH well en route to adopting a PoS consensus model, BTC might soon become the only energy-intensive cryptocurrency, an occurrence that might deal the cryptocurrency a major blow, especially now that most countries are striving to become carbon neutral or negative in the next few decades.