Officials Call For EU-Wide Ban On Proof Of Work Mining

November 19, 2021 11:30 AM
Crypto Story of the Day

Crypto Story of the Day




BTC is marginally lower this morning, with the coin's share in the aggregate crypto market cap at ~43%. BTC spot volume on Bitfinex remains elevated and is ~2x the 30-day average.’

Crypto Story of the Day

Norwegian and Swedish officials have expressed support for banning BTC mining due to the activity’s perceived environmental cost. However, BTCs environmental benefits remain unexplored.

Last week, Erik Thedéen, Director of the Swedish Financial Supervisory Authority, and Björn Risinger, Director of the Swedish Environmental Protection Agency, said that BTC’s rising energy usage is threatening Sweden's ability to meet its obligations under the Paris Climate Agreement. 

In an open letter addressed to the EU, the officials called for an EU-wide ban on proof-of-work mining. According to the Cambridge Centre For Alternative Finance, Sweden accounted for 1.16% of the global BTC hash rate as of July. 

Echoing the Swedish officials’ sentiment, this week, Norwegian Local Government and Regional Development Minister Bjørn Arild Gram said the country is considering a ban on BTC mining due to the activity’s environmental toll. 

The asset’s perceived environmental costs have received widespread attention in the past, especially following Tesla’s suspension of BTC payments due to the ‘rapidly increasing use of fossil fuels for bitcoin mining.’ That episode and other criticism, such as an FT article titled ‘The environmental idiocy of Tesla’s bitcoin bet,’ elicited a response by some BTC proponents who highlighted overlooked environmental benefits associated with mining. 

For example, Square and ARK Invest published a memo on possible environmental benefits associated with BTC mining. The memo argues that BTC can be used to absorb excess energy - which cannot be stored over time -  produced by renewables such as wind or solar. By combining storage, BTC mining, with renewables, returns for project investors and developers could be greatly improved. 

This could serve to attract capital to renewables further or allow for the construction of energy projects before grid interconnections are completed, with power directed to miners before selling to the grid becomes possible. 

In October, the City of North Vancouver entered an agreement with BTC mining company MintGreen to heat the city using excess heat from BTC mining. According to MintGrean, their ‘proprietary Digital Boilers recover more than 96% of the electricity used for bitcoin mining in the form of heat energy that can be used to sustainably heat communities and service industrial processes.’ 

Beyond potential future use-cases, several BTC mining firms have employed innovative business models offering environmental benefits. For example, Calgary-based Upstream Data sells equipment that allows gas and oil facilities to use waste gas to mine BTC. The firm’s solution allows waste energy to be ‘converted into useful work and monetized.’ 

Takeaway: As BTC adoption continues, it is natural that debate surrounding its costs and benefits takes place. However, considering the asset’s earliness, officials are likely not yet aware of the potential benefits of BTC mining. This may change over time as use-cases, such as the ones described above, become more widespread.


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