The call for a ban on proof-of-work crypto mining, because of its high energy consumption, has resonated across the European Union. Erik Thedeen, the vice-chair of the European Securities and Markets Authority (ESMA), said crypto mining has become a national issue. He believes ban is the only solution.
However, Thedeen, who is also the director-general of Sweden’s financial services regulator, highlighted that he was not calling for a general ban on the crypto industry. He said a discussion was a must to help shift the thriving industry to more efficient technology.
Governments recognize the fact that the financial industry and a great many large institutions and corporates are active in the crypto space. They also have responsibilities towards the environment, the people (social) and governance.
Blockchains use both proof-of-work and proof-of-stake. But the proof-of-work is very much energy-intensive, while proof-of-stake depends on a few validations to process transactions. However, it has been noted that new blockchain companies are adopting proof-of-stake because it is energy efficient. The older blockchains, mainly bitcoin and ethereum are sticking to proof-of-work because it aligns better with decentralization.
Crypto mining, in the past three years, has come to the fore as a major energy consumer and destructive to the environment. This hasn’t gone down well with environmentalists and governments across the world as they are trying to minimize emissions and power consumption to meet their climate goals. As such, China has imposed a ban on crypto mining and so has Kosovo, while Iran has a three-month temporary ban in place.