European Regulator Calls for Effective Ban on Proof-of-Work Crypto Mining

Thursday, 20/01/2022 | 01:43 GMT by Nicholas Otieno

Erik Thedéen calls for a ban on Bitcoin mining.

The regulator is advocating for a shift to more efficient technology.

Erik Thedéen, the Vice-Chairman of the European Securities and Markets Authority, has renewed fresh calls for a widespread ban on Bitcoin mining. In an interview with The Financial Times media outlets, Thedéen raised concerns over the increasing use of renewable energy dedicated to Bitcoin mining. The regulator described Bitcoin mining as a national threat for his native country Sweden and warned that cryptocurrency mining poses a risk to meeting climate change goals enshrined in the Paris Agreement. Thedéen has, therefore, called upon European regulators to consider banning a mining method regarded as ‘proof of work,’ which is mainly used for Bitcoin mining and a few other cryptocurrencies . Instead, he advocates for the use of ‘proof of stake’ as a better energy-efficient alternative.

Both Bitcoin and Ether rely on the ‘proof of work’ method, which requires all participants on the blockchain network to verify transactions. Miners who use sprawling data centers and fast computers to solve complex puzzles are rewarded for recording transactions with newly minted coins. However, that model requires a huge amount of energy than the ‘proof of stake’ method.

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

In November 2021, Melanion Capital, a Paris-based alternative investment firm, echoed the same sentiment, describing ‘proof-of-work’ mining as “completely misinformed.” However, the investment company justified that because of the decentralized nature of Bitcoin. There is no lobby group to defend its interest, which “should not be taken as an opportunity to implement measures making the industry illegal for its lack of defensive powers.”