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Ban on Proof of Work: the threat to Bitcoin from the European Union

From the top of the European Union comes a clear message against Bitcoin mining: Proof of Work deserves a ban because it consumes too much energy. This is said by Erik Thedéen, vice president of the European Securities and Markets Authority (ESMA).

Erik Thedéen, the “hawk” of Bitcoin mining in the European Union

Erik Thedéen, in addition to his role in the ESMA, is also director general of Finansinspektionen, Sweden’s financial supervisory authority. His words echo those of the Swedish authority of which he is a member, which came in November, regarding the high consumption of Bitcoin mining.

As the Financial Times reports, the authority was already appealing to the European Union two months ago to start looking at the situation:

“[We call for] the EU to consider an EU-level ban on the energy-intensive mining method proof of work”.

Erik Thedéen
Erik Thedéen

A ban against the Proof of Work consensus algorithm

The words of Erik Thedéen and the Swedish authority are actually not against Bitcoin in general, but against Proof of Work, i.e. the consensus algorithm that is blamed for far too high an energy cost. 

Ethereum is also included, but it has already started the transition to Proof-of-Stake, which should be completed in June 2022. 

Speaking of PoW, Erik Thedéen’s opinion is that the industries involved in Bitcoin mining have social responsibilities for the high energy consumption

The point is that the issue of mining with clean energy is also unsustainable: they take away from the whole system of renewable sources to channel them to Bitcoin, and others are left with no choice but to continue using coal. According to Thedéen, this is becoming a national issue in Sweden

The remedy:

“The solution is to ban proof of work, Proof of stake has a significantly lower energy profile”.

Bitcoin miners without peace

It seems that ever since China banned Bitcoin mining, the BTC production business has been restless. Chinese miners in fact had found new landings in other countries such as Kazakhstan, Iran, or Kosovo, but in all cases excessive energy consumption proved to be a problem. 

In Kazakhstan, it is one of the reasons that has led to a dramatic increase in energy prices and subsequent street protests. Iran has also had to stop Bitcoin mining due to excessive consumption. Nor is it better in Kosovo, where mining has been declared illegal in the face of continuous power outages. 

Unfortunately, in a historical moment in which there is a shortage of energy and the one that does exist is expensive, Bitcoin only increases the problem. But it would be a mistake to consider it the enemy to beat. 

Eleonora Spagnolo
Eleonora Spagnolo
Journalist passionate about the web and the digital world. She graduated with honours in Multimedia Publishing at the University La Sapienza in Rome and completed a master's degree in Web and Social Media Marketing.