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Sweden’s Central Bank Wants to Ban Bitcoin’s Proof of Work 

Yet another central bank is coming after Bitcoin – this time for its oft-criticized proof of work (POW) consensus mechanism.
It  recently suggested that POW mining consumes too much energy, and ought to be banned in favor of “less energy-intensive methods.”

  • As the central bank tweeted on Friday, energy consumption has increased sharply in recent years – especially for Bitcoin.
  • According to estimates from Cambridge University, the network currently consumes around 128 TWh of electricity per year. That’s more than the entirety of some of Sweden’s neighboring countries, including Finland and Norway.
  • In Sweden, the Riksbank reports that Bitcoin mining has contributed to annual electricity consumption equivalent to that of 200,000 homes.
  • As such, the central bank agrees with the Swedish Financial Supervisory Authority and Environmental Protection Agency on the ban on POW.
  • POW is a mechanism whereby users must solve an extremely difficult computational problem to create Bitcoin’s next block.
  • The creator receives a reward in Bitcoin – an incentive that has fostered an entire energy-intensive industry running on mining the asset. That energy goes towards generating hashes as quickly as possible to guess an answer to the problem.
  • On Thursday, Bitcoin’s hash rate reached a new all-time high at 258 exahashes per second. That’s 258 quintillion hashes each second, globally.
  • China enacted a ban on Bitcoin mining – and crypto in general – last year. However, this caused miners to flee to other regions like North America, having no lasting impact on electricity consumption.
  • The European Union also voted to ban Proof of Work earlier this year, but the vote didn’t pass.
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Despite Bitcoin’s vast energy use, a majority of the industry reportedly gets its power from sustainable energy, according to the Bitcoin Mining Council.

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