Sweden’s Central Bank Tackles Bitcoin’s Energy-Intensive PoW

Image: Shutterstock


The world’s oldest central bank, Riksbank aka the Swedish central bank, released a report, “Cryptocurrencies and their Impact on Financial Stability”, claiming that Bitcoin (BTC) and crypto mining should be prohibited.

The report argues for a ban on Bitcoin mining due to environmental concerns and the fact that the proof-of-work (PoW) consensus mechanism consumes large amounts of power to solve complex computer puzzles. The report stated: “Recently, crypto asset mining has been established in northern Sweden, where it consumes as much electricity as 200,000 households consume annually.”

In its review, the paper quotes peers from the environmental agency and the Swedish Financial Supervisory Authority, who said: “The proof-of-work method, which is used to confirm transactions and mine new crypto assets, should be banned in favor of other, less energy-intensive methods.

Sweden is home to several bitcoin startups and is quite advanced in bitcoin adoption. However, given that banks and governments regularly target PoW power consumption, the report came as little surprise to people.

Prominent Bitcoiners like Christian Ander, the founder of BT.CX, a Swedish Bitcoin exchange, and Bitcoin author Knut Svanholm, who wrote the ∞/21M, were quick to rebut the report. Svanholm shared a YouTube video demonstrating how “none of the energy used for Bitcoin mining is wasted”.

Svanholm also said, “A central bank doesn’t have to tell people what they can and can’t do with their electricity. If they really cared about the environment, they would shut down their own operation for good tomorrow morning.

Ander said the report was “highly inappropriate”. In one of his tweets, he implies that energy consumption must be neutral with production regulations. However, what people do with it should not be a regulatory matter.

Another report examining the energy efficiency of crypto transactions stated, “When the Bitcoin Lightning layer is compared to the Instant Payments scheme, Bitcoin gains exponentially in scalability and efficiency, proving to be up to a million times more energy efficient per transaction than Instant Payments.”

This report agrees with the ban proposed by the Swedish central bankers. Research from the Cambridge Center for Alternative Finance revealed that around 15 GW of electricity is consumed by Bitcoin every day. However, the global sports industry emits three times more emissions than the Bitcoin network.

The Bitcoin Lightning Network recently reached the 4,000 BTC goal and shows great promise as a payment solution. Payments on the Lightning Network occur off-chain and consume much less power than traditional mining operations. In 2021, Bitcoin achieved the status of the cleanest industry in the world, given its high renewable energy mix.

The writer is the founder of yMedia. He ventured into crypto in 2013 and is an ETH maximalist. Twitter: @bhardwajshash

We wish to thank the writer of this write-up for this remarkable material

Sweden’s Central Bank Tackles Bitcoin’s Energy-Intensive PoW

You can view our social media profiles here as well as other related pages herehttps://metfabtech.com/related-pages/