Crypto assets pose great threat to people and climate: Swedish authorities
New Delhi: As India and the United States prepare to fix an unregulated world of cryptocurrencies, Sweden’s leading finance and environmental authorities have called for an EU-wide ban (EU) of cryptocurrency mining, claiming that the risks to the consumer are significant as crypto assets are commonly used for criminal purposes such as money laundering, terrorist financing and ransomware payments .
The most common method of producing crypto-assets requires huge amounts of electricity and generates significant CO2 emissions.
“The social benefit of cryptoassets is questionable. The Swedish Financial Supervisory Authority, like other international organizations such as the International Monetary Fund and the US Federal Reserve, considers certain aspects of crypto assets to be problematic, ”said Erik Thedeen, Director of the Authority. Swedish financial supervisor, in an open letter.
“Crypto assets also have a significant negative impact on the climate, as mining results in both significant greenhouse gas emissions and threatens the urgently needed climate transition. This is alarming and therefore cryptoassets need to be regulated, ”Thedeen added.
The letter comes at a time when banking regulators in the United States have announced a plan to clarify the rules and regulations regarding how banks can use cryptocurrencies over the next year, at a time when governments around the world, including India, are assessing the risks. associated with cryptocurrencies and protect investors.
In India, the next official cryptocurrency and digital currency regulation bill, 2021 aims to ban all private cryptocurrencies in India.
The University of Cambridge and Digiconomist estimate that the two largest crypto assets, Bitcoin and Ethereum, together consume about twice as much electricity in a year as Sweden as a whole.
Digiconomist estimates that cryptoassets at their current market value cause up to 120 million tonnes of CO2 to be released into the atmosphere per year.
“To get a better idea of that number, we can compare it with emissions from long-haul flights. Using the aviation industry’s own data from ICAO’s carbon emissions calculator and adding the high altitude effect shows that the emissions of the two largest crypto assets are today equal to 100 million round-trip flights between Sweden and Thailand, ”said Bjorn Risinger, Managing Director. to the Swedish Environmental Protection Agency.
The reason for the industry’s large carbon footprint is that the majority of crypto-production takes place in countries with low energy prices and a high share of fossil-dependent power generation.
Since the value of Bitcoin has increased so much, it has also extended the lifespan of former fossil fuel producers, authorities noted.
They called for an EU-level ban on the proof-of-work of the energy-intensive mining method.
“It is important that Sweden and the EU lead the way and lead by example in order to maximize our chances of complying with the Paris Agreement. We should also strongly encourage other countries and regions to follow suit, ”the open letter said.