The Swedish Financial Supervisory Authority recently published an open letter to the European Union and warned about energy issues of cryptocurrency mining. According to the authority, the mining of digital assets generates large CO2 emissions.
The letter by Erik Thedéen, Director General at the Swedish Financial Supervisory Authority, and Björn Risinger, Director General at the Swedish Environmental Protection Agency, highlighted that some of the aspects of cryptocurrency mining are extremely problematic.
Both authorities also raised questions about the social benefits of cryptocurrency mining. The letter gave the example of Bitcoin and Ethereum, the world’s top two cryptocurrency assets in terms of market cap. According to an estimate by the University of Cambridge and Digiconomist, BTC and ETH use almost twice as much electricity in one year as the whole of Sweden.
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“Digiconomist estimates that crypto-assets at their current market value lead to the release of up to 120 million tons of CO2 in the atmosphere per year. To get a better sense of this number, we can compare it with emissions from long-distance flights. Using the aviation industry’s own data from ICAO Carbon Emissions Calculator and adding the high elevation effect shows that the emissions from the two largest cryptocurrency assets’ today is equal to 100 million round-trip flights between Sweden and Thailand,” the letter states.
According to the details outlined by the letter, many cryptocurrency mining firms have moved to Sweden in recent months amid a ban on the mining of digital currencies in China. With that, the country is facing some serious issues including a jump in electricity consumption for Bitcoin mining. To counter the issue, the Swedish regulatory authorities outlined some key policy changes.
“Between April and August this year, electricity consumption for Bitcoin mining in Sweden increased by several hundred percent and now amounts to 1 TWh annually. Sweden and other countries could introduce a tax on the energy-intensive production of bitcoin. Another option is to communicate more widely around the climate problems related to cryptocurrency assets, in the hope that this will lead to both producers and investors demanding a shift to mining methods that require less energy,” the letter added.