A couple of days ago, Sweden’s Minister for Energy Khashayar Farmanbar said that the country needs energy for more useful things than Bitcoin mining.
This was reported by Bloomberg, citing statements provided by Farmanbar during an interview.
Energy consumption for Bitcoin mining
The curious thing is that, globally, Bitcoin mining consumes less than other really unhelpful things, like watching adult videos online, so it is curious that the Minister for Energy of Sweden is afraid of Bitcoin’s energy expenditure.
Moreover, banking or gold mining is much more problematic for the environment, as a study by ARK Investment Management recently revealed.
However, this curious paradox is easily explained by admitting that the minister is unaware of this data.
Sweden is the third European country where the most electricity is consumed to mine Bitcoin, with a share of global consumption of less than 1%. The government of which Farmanbar is a member intends to provide electricity to projects that create jobs, such as steel mills, even though Bitcoin mining also creates some jobs for sure.
In particular, the issue the Swedish government wants to address is that of greater electrification of the manufacturing industry, which has been complicated lately especially by the rising cost, particularly of fossil fuels such as natural gas and oil. Sweden currently produces a lot of energy from renewable sources anyway, including hydroelectric power plants and giant wind farms, but the three biggest sources are nuclear, oil and biomass/waste.
According to Bloomberg, these comments by Farmanbar suggest that Sweden may become less hospitable to Bitcoin mining. In fact, the government has asked the Swedish Energy Agency to find a way to monitor how much is used for digital infrastructure, with a focus on that used for cryptocurrency mining.
How to reduce energy consumption due to mining
Generally, there are three types of solutions to reduce mining consumption in a given country.
The first, most obvious but much more difficult to actually put into practice, is to ban mining completely. China did this last year, but failed.
The second, also very difficult to accomplish, but reasonable, is to force miners to use only renewable energy sources. Consumption would remain high, but at least consumption from fossil fuels would be reduced. This is the solution they are trying to implement in New York State.
The third, which is perhaps the one that is most easily applicable though potentially less impactful, is to apply a surcharge to the electricity used for mining, so as to discourage miners from using a lot of it.
The solution that will be adopted by Sweden is not yet known, but perhaps a total ban on mining is the least likely of the three. The one hypothesized by Bloomberg is the third, which is the tax option, perhaps to be applied to the entire data center industry, regardless of their use.
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