ESMA Calls for Ban on Proof-of-Work Crypto Mining

A top EU financial regulator has renewed calls for a bloc-wide "ban" on the main form of bitcoin mining and sounded the alarm over the rising proportion of renewable energy devoted to crypto mining.

Erik Thedéen, vice-chair of the European Securities and Markets Authority(ESMA), said that bitcoin mining had become a "national issue" for his native country Sweden and warned that cryptocurrencies posed a risk to meeting climate change goals in the Paris agreement.

Thedéen said that European regulators should consider banning a mining method known as "proof of work" and instead nudge the industry towards the less energy-intensive "proof of stake" model to cut down on the sector's vast power usage.

Bitcoin and ether, the two largest cryptocurrencies by volume, both rely on a proof of work model, requiring all participants on the blockchain digital ledger to verify transactions. Miners, who use sprawling data centres filled with fast computers to solve complex puzzles, are rewarded for recording transactions with newly minted coins.

That requires significantly more energy than the proof of stake model, where the number of parties signing off trades is much smaller.

"The solution is to ban proof of work," said Thedéen, who is also director-general of Sweden's Financial Supervisory Authority and chair of sustainable finance for international body Iosco. "Proof of stake has a significantly lower energy profile."

Source：Financial Times