Sweden plans to ban Proof of Work

According to a German technology news site, Sweden, in consultation with the European Commission, is considering vetoing Proof of Work mining.

European Commission and Sweden to ban Proof of Work

According to a report published by netzpolitik.org, a German website dedicated to technology topics, Swedish financial regulators and the European Commission have been discussing the possibility of banning the Proof-of-Work system due to its environmental impact.

This news comes just a few weeks after the approval of the new crypto regulation, MiCA, from which the proposal to ban PoW was rejected for the time being, as had been suggested by some sources in the European Parliament.

But clearly the issue is still very much up in the air, as many countries, including Sweden and Germany, believe that the Proof of Work system is too unsustainable, especially now that commodity and energy prices have skyrocketed.

For some time now, there has been much discussion about the environmental impact of Bitcoin mining and its excessive energy consumption, which derives from having to solve very complicated mathematical calculations to mine new BTC using very powerful and therefore very energy-intensive machines. 

Elon Musk himself has on several occasions pointed out this negative aspect of Bitcoin, which led him to stop accepting Bitcoin as a form of payment.

For some time now, there has been talk of how to make cryptocurrency mining more sustainable, perhaps by using alternative energies such as nuclear energy, or perhaps by using the volcanic energy proposed by the president of El Salvador for the construction of the new Bitcoin City.

The environmental impact of the PoW consensus algorithm

After China banned all mining activities, which had about 65% of the world’s total activities in that country, miners looked for alternative countries where there was plenty of cheap energy, such as Texas or Kazakhstan.

Ethereum, which also uses a PoW-based protocol like Bitcoin, is ready to launch a new update, Merge, which will see a switch to the Proof of Stake system, considered much more sustainable, cheap and scalable.

Returning to Sweden, which has always been very attentive to environmental issues, taking Greta Thunberg as an example, it should be added that already in November the director of the financial regulator and that of the environmental protection agency wrote a long letter to the European Commission on the subject of energy consumption and cryptocurrencies.

The letter read:

“The University of Cambridge and Digiconomist estimate that the two largest crypto-assets, Bitcoin and Ethereum, together use around twice as much electricity in one year as the whole of Sweden. We therefore call for the EU to consider an EU-level ban on the energy-intensive mining method proof of work”.

This had been done with a view to achieving a ban on PoW in Europe when MiCA was approved last March. 

The amendment tabled by some socialist MEPs ultimately failed by a few votes. But now the Swedish government itself seems to want to return to the fray in order to arrive at a definitive ban on Proof of Work, which would have clear consequences for the cryptocurrency market.

The fact that Germany now has an executive with a strong and important presence of Green Party representatives could be a very important backing for this proposal to be passed as soon as possible and prohibit mining activities across the European Union.