Bitcoin mining, according to Erik Thedéen, vice chair of the European Securities and Markets Authority, is a threat to fulfilling climate change goals.
The European Securities and Markets Authority is aware of the danger bitcoin mining poses to achieving the Paris Agreement’s climate change targets.
The watchdog’s vice-chair is Erik Thedéen. In an interview, he stated that the amount of renewable energy committed to crypto mining has increased significantly. He went on to say that mining is now a “national issue” in Sweden.
Thedéen also stated that he is not pushing for a blanket ban on cryptocurrency. He does, however, advocate for a prohibition on proof-of-work mining and a shift to the proof-of-stake paradigm. It is for the reason that it uses less energy overall.
Over the last decade, mining has grown into a massive industry that shows no signs of slowing down. By the end of 2021, the amount of computing power committed to the industry had hit new highs. It was despite a blanket prohibition on mining and crypto in China, one of the world’s largest crypto markets.
Bitcoin mining necessitates a significant amount of energy. Although estimates of how much it consumes and what kind of environmental impact it may have vary widely. China’s crackdown has knocked off nearly half of the world’s mining equipment in a matter of hours.
It went on to say that the move has offered countries like Canada and the United States an opportunity to help fill up the gaps. Texas and Miami, for example, have been welcome transplants.
Proof-of-stake versus Proof-of-work
Proof-of-work is the method by which a blockchain checks the legitimacy of blocks or transactions. In order to confirm transactions, miners pool their processing resources to compete against one another in solving complicated tasks. They award the coins to miners in exchange.
The Proof-of-Work model necessitates each blockchain participant verifying transactions, which consumes a significant amount of energy.
On the other hand, a far smaller number of people confirm the transactions because of the proof-of-stake mechanism. Participants stake their own cryptocurrency to create validating nodes that verify transactions.
Both consensus processes have proven to be effective. Each side, though, has its own set of trade-offs.
POW consumes a lot of energy and requires a lot of equipment to operate. It also gives the system a boost in terms of security. Because gaining 51 percent control of the entire network would necessitate a massive investment of resources by a renegade entity. The disadvantage is that growing the network is expensive as energy and equipment requirements increase over time.
Coins or tokens serve as validators in POS networks. The coins or tokens can be scaled very fast. It is because they don’t require any equipment or energy. The network control can be purchased. In which is a disadvantage. To attack the network, all you need is money.