ESMA vice-chairman calls for ban on proof-of-work crypto mining

In an interview with Financial Times Vice-chairman of European Securities and Markets Authorities (ESMA) Erik Thedèen urged EU regulators to restrict the usage of the proof-of-work model while mining cryptocurrency. 

Thèedeen further stated that extensive usage of the proof-of-work mining model poses serious harm to the environment and should be banned to promote a sustainable crypto mining approach.

ESMA’s Erik Thedèen encourages the use of the Proof-of-stake mining model

In an interview with Financial Times, Thedèen, who is also the director-general of FCA Sweden, stated that cryptocurrencies that employ proof-of-work models are seriously harming the environment due to their extensive energy consumption. Instead, he urged European regulators to promote the Proof-of-stake mining consensus, which consumes comparatively less energy than the PoW mining model. 

“We need to discuss shifting the industry to more efficient technology. The solution is to ban proof-of-work. Proof-of-stake has a significantly lower energy profile.” Thedèen told Financial Times. 

Thedèen further stated how the extensive process of mining Bitcoin has become a national issue in Sweden, as a large percentage of renewable energy produced in the country is dedicated to mining Bitcoin, which according to Thedèen, is somewhat “ironic.” 

“It would be an irony if the wind power generated on Sweden’s long coastline would be devoted to bitcoin mining,” Thedèen said in the interview

The ESMA top executive also opined that Swedish electricity should be utilized in creating traditional services rather than using it to mine Bitcoin. 

The proof-of-work mining model is notoriously known to consume large amounts of energy during the process of mining crypto. Several new blockchain networks have adopted PoS mining models. However, the two largest cryptocurrencies, Bitcoin and Ethereum, still utilize PoW mining models. 

However, it is to be noted that Ethereum has recently decided to transition towards a proof-of-stake consensus, known as Ethereum web 2.0, which is an energy-efficient mining protocol, while Bitcoin still relies on PoW mining consensus to validate transactions.

Rising energy and environmental concerns have always plagued the PoW consensus. Many countries have now adopted a stricter stance regarding mining cryptocurrencies, and several regions have banned mining Bitcoin citing its extensive energy requirement.