The Swedish government has called for a European Union-wide ban on the mining of energy-intensive cryptocurrencies like bitcoin and ethereum.
Bitcoin and ethereum use an energy-intensive computer algorithm called ‘proof-of-work’ to generate new tokens and cement their transaction histories.
In an article published on the website of Sweden’s financial markets regulator, the heads of two government agencies said Sweden needs the renewable energy currently targeted by cryptocurrency producers for its own purposes.
Any expansion of cryptocurrency mining in the country would also jeopardise Sweden’s ability to meet its climate change goals, said Erik Thedéen, director general at the Swedish Financial Supervisory Authority and Björn Risinger, director general at the Swedish Environmental Protection Agency.
“Increased use by miners threatens our ability to meet the Paris Agreement,” said Thedéen and Risinger.
According to Thedéen and Risinger, interest from cryptocurrency miners in setting up operations in the country has risen sharply since China imposed a ban on mining this summer.
“Crypto-producers are turning their attention to the Nordic region, where prices are low, taxes for mining-related activities are favourable, and there is good access to renewable energy,” they said.
this is equivalent to the greenhouse gas emissions from 100 million round-trip flights between Sweden and Thailand
Thedéen and Risinger said that electricity consumption for bitcoin mining in Sweden increased by several hundred per cent between April and August this year and now amounts to 1 terawatt hour annually, equivalent to the electricity consumption of 200,000 Swedish households.
“Crypto-assets at their current market value lead to release of up to 120 million tonnes of CO2 in the atmosphere per year,” said Thedéen and Risinger. They calculated that this is equivalent to the greenhouse gas emissions from 100 million round-trip flights between Sweden and Thailand.
three quarters of bitcoin mining now takes place in four countries
Thedéen and Risinger called for an EU-level ban on proof-of-work cryptocurrency mining, and for Sweden in the interim to block the further establishment of crypto-mining operations using energy-intensive methods.
According to researchers at Cambridge University, three quarters of bitcoin mining now takes place in four countries: the US (35 percent), Kazakhstan (18 percent), Russia (11 percent) and Canada (10 percent).
China’s share of global mining activity has fallen from half in Q1 2021 to zero now, reflecting its government’s recent ban.
Amongst EU countries, Ireland and Germany each have around a 5 percent share of bitcoin mining, the Cambridge researchers say, although these figures are likely significantly inflated due to redirected IP addresses via the use of virtual private networks or other proxy services.
Although individual US states, such as Texas, have welcomed the arrival of cryptocurrency miners, Quebec’s energy utility, Hydro Quebec, has recently cracked down on the diversion of electricity for cryptocurrency mining.
In Kazakhstan, the deputy energy minister recently said the government would need to limit the power supplied to unregistered cryptocurrency miners because of the strains on the local electricity grid.
60 percent of Kazakhstan’s cryptocurrency-related energy consumption derives from the activities of such unsanctioned miners, a speaker at the World Digital Mining Summit said this week.
Sign up here for the New Money Review newsletter
Click here for a full list of episodes of the New Money Review podcast: the future of money in 30 minutes
Related content from New Money Review
Half of bitcoin miners go dark in two months
The cat and mouse game of cryptocurrency mining