Swedish Central bankers snipe Bitcoin mining, cite rampant energy use

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Another day, another environmental attack on proof of work (PoW) mining. A report shared by the Swedish Central Bank argued 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 had a crackdown on PoW cryptocurrency mining. PoW mining employs energy-guzzling data centers that solve puzzles to secure the blockchain. The report stated:

“Recently, some extraction of crypto assets has been established in northern Sweden, where it consumes electricity to 200,000 households on an annual basis.”

For Knott Swanholm, a bitcoin writer who recently wrote “∞/21M” “The Central Bank has no business telling people what they can and cannot do with their electricity,” Cointelegraph said.

“If they really care about the environment they will close their own operation for good tomorrow morning.”

The paper cites peers from the Environment Agency and the Swedish Financial Supervisory Authority, the United States Securities and Exchange Commission, in their examination of bitcoin’s energy use:

“The Proof of Work method, which is used to confirm transactions and mine new cryptocurrencies, should be banned in favor of other, less energy-intensive methods.”

Swanholm has a different view: “Bitcoin mining is guessing a number over and over. […] As many other Swedish institutions have preceded him, he [the central bank] Choose to comment on something they don’t understand and who don’t even have an opinion.”

This report is not surprising as banks and governments routinely target the use of PoW energy. The report also flies into the matter of bitcoin adoption in Sweden. Home to many bitcoin startups, Sweden has advanced in terms of European bitcoin adoption.

Prominent Swedish bitcoiners, including Swanholm, the founder of Swedish bitcoin exchange BTX, as well as Christian Ander, denied the report on Twitter. Svanholm shared a Youtube video arguing that “no energy used for bitcoin mining goes to waste.”

Ander called the report “extremely unfair”. He tweeted:

“Energy consumption should be neutral, production should be regulated. Don’t regulate what individuals do with it.”

As friends of the bank at the International Monetary Fund move forward with a central bank digital currency – because it will use less energy – the figures for bitcoin mining are stark. At the end of 2021, bitcoin ranked first for the world’s cleanest industry thanks to its high renewable energy mix. In neighboring Norway, bitcoin miners use 100% renewable energy, while bitcoin miners around the world strive to make the world a better place.

related: Bitcoin’s Actual Energy Use Questioned As Ethereum Founder Criticizes BTC

A proposed ban by Swedish central bankers was also issued on the day a report examining the energy efficiency of crypto transactions was published. The report stated:

“When compared to the Bitcoin Lightning Layer instant payment scheme, Bitcoin rapidly gains in scalability and efficiency, proving to be a million times more energy efficient per transaction than instant payments.”

Bitcoin’s Lightning Network recently hit the 4,000 BTC milestone, showing its promise as a payment solution. Lightning payments are off-chain and use significantly less electricity than the bitcoin miners that secure the network layer.

Nonetheless, research from the Cambridge Center for Alternative Finance states that bitcoin consumes an estimated 15GW of electricity every day. In meme-worthy content, one Twitter user’s Napkin Math claims that clothes dryers in the US consume more energy:

data in our world report good demonstrated that the global games industry emits three times the emissions of the bitcoin network. This begs the question, why do central banks continue to attack PoW’s energy use? And which financial institution will fire the next shot?