EU Swedish representative calls for banning “proof of work” crypto-mining
A European Union chairman calls for the banning of “proof of work” amidst electricity issues caused by mining cryptocurrencies. Erik Thedéen, the vice-chairman of EU’s ESMA, stated that a bloc-wide ban is necessary to implement for “proof of work”. This is after he shared that the crypto mining activities in Sweden have caused a national issue regarding energy consumption. His statement was shared during his interview with the Financial Times.
Thedéen also worries about countries like China that are banning crypto mining. He predicted that miners from these countries are likely to go elsewhere to do their mining. Thus, EU regulators are anticipating an influx of crypto miners within their territories.
Moreover, Thedéen added that allowing the “proof of work” to regulate cryptocurrency mining is against the union’s efforts to prevent climate change. Although he and the European Union are not against Bitcoin and the altcoins, they do prefer that it does not harm the environment. Thus, they also offered an alternative to the “proof of work”.
What is a crypto mining “proof of work”?
The “proof of work” is a system on how crypto mining is done. In this system, miners are encouraged to use powerful computers to mine digital coins. Furthermore, it is not easy to mine these cryptocurrencies. That is because crypto mining is technically a race of who will get to solve all the complex mathematical equations first. Those who can beat their competition are rewarded with the digital coin. To be the first one to finish solving, miners use multiple high-powered computers. As a result, these online mining activities consume a lot of energy.
Both Bitcoin and Ethereum are mined through the “proof of work” system. Since these two cryptocurrencies are the largest and highest-valued among other cryptocurrencies, a lot of people are participating in mining them. Thus, it is safe to say that not only Sweden and the EU are experiencing this massive energy consumption issue.
What is a proposed alternative to “proof of work”?
However, the European Union is not aiming to ban crypto mining altogether. They are only banning the “proof of work” system. Therefore, they are open to other mining systems that are less intensive in consuming electricity.
Thedéen also proposed an alternative called the “proof of staking” system. Miners are rewarded with crypto coins depending on how much they invested in the network. With this system, mining cryptocurrencies will be less energy-consuming. Recently, Ether has announced that they may be adopting the “proof of staking” system this 2022.
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