Another day, another environmental attack on proof-of-work (PoW) mining. A report shared by the Swedish central bank holds that energy-intensive Bitcoin (BTC) and cryptocurrency mining should be banned.
The Swedish central bank, known as the Riksbank, is the oldest central bank in the world. In a damning report titled “Cryptocurrencies and their Impact on Financial Stability,” the bank lashed out at PoW cryptocurrency mining. PoW mining employs data centers that consume energy and solve puzzles to secure the blockchain. The report said:
“Recently, some mining of crypto assets has been established in northern Sweden, where as much electricity is consumed as 200,000 homes a year.”
For Knut Svanholm, a Bitcoin author who recently published “∞/21M,” told Cointelegraph: “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.”
The document quotes its counterparts from the environmental agency and the Swedish Financial Supervisory Authority, equivalent to the United States Securities and Exchange Commission, in their analysis of the energy use of Bitcoin:
“The proof-of-work method, which is used to confirm transactions and mine new cryptocurrencies, should be banned in favor of other methods that consume less power.”
Svanholm has a different opinion: “Bitcoin mining is guessing a number over and over again. […] As so many other Swedish institutions have done before, they [el banco central] decide to comment on something they don’t understand and about which they have nothing to do, not even give an opinion”.
The report is not a surprise, given that banks and governments regularly attack the use of energy from the PoW protocol. The report also confronts the adoption of Bitcoin in Sweden. Home to a number of Bitcoin startups, Sweden is ahead in terms of Bitcoin adoption in Europe.
Prominent Swedish bitcoiners, including Svanholm, as well as Christian Ander, the founder of Swedish Bitcoin exchange BTX, were quick to refute the report on Twitter.. Svanholm shared a video on YouTube in which he argued that “none of the energy used to mine Bitcoin is wasted.”
Här är en liten video jag och några kompisar har gjort om ämnet: https://t.co/uz4p5Ap7EC
— knutsvanholm.com ∞/21M (@knutsvanholm) June 10, 2022
Ander called the report “highly inappropriate.” He tweeted:
“Energy consumption must be neutral, production must be regulated. Don’t regulate what individuals do with it.”
While the friends of the International Monetary Fund push ahead with a central bank digital currency—because it would use less energy—the Bitcoin mining numbers are stark. At the end of 2021, Bitcoin ranked first as the cleanest industry in the world with its high mix of renewable energy. In neighboring Norway, Bitcoin miners use 100% renewable energy, while Bitcoin miners around the world strive to make the world a better place.
The Swedish central bankers ban proposal also comes at the same time as the release of a report looking at the energy efficiency of cryptocurrency transactions. The report states:
“When Bitcoin’s 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.”
- Seven Times Bitcoin Miners Made the World a Better Place
The Bitcoin Lightning Network has recently reached the 4,000 BTC milestone, showing its promise as a payment solution. Lightning payments take place “off-chain” and use much less electricity than Bitcoin miners that secure layer 1 of the network.
Nevertheless, research from the Cambridge Center for Alternative Finance claims that Bitcoin consumes an estimated 15GW of electricity each day. In meme-worthy material, a Twitter user’s math claims that clothes dryers in the United States use more energy:
(reposting the math here, for ref)
– There are 130M US households
– An avg household uses 12000 KWh/yr (EPA)
– Dryers are 6% of household energy consumption (EPA), which = 720 KWh / yr
– 720 KWh * 130M = 93.6 TWh
– Bitcoin uses 70-120 TWh (estimates vary)^ that’s just the US
— Daniel Ƀrrr (@csuwildcat) February 15, 2021
(repeating the math here, for reference)
– There are 130 million households in the US.
– An average home uses 12,000 KWh/year (EPA)
– Dryers represent 6% of household energy consumption (EPA), which is equivalent to 720 KWh/year
– 720 KWh * 130 million = 93.6 TWh
– Bitcoin uses between 70 and 120 TWh (estimates vary)^ that’s only in the US
A report from Our World in Data demonstrated that the global sports industry emits three times more emissions than the Bitcoin network. This leads us to ask, why do central banks keep attacking PoW energy use? And which financial institution will fire the next shot?
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