Tag: Sweden

BIS Launches Project Icebreaker with Central Banks to Explore CBDC

by Blockchain News

The Bank for International Settlements (BIS) has rolled out Project Icebreaker together with the central banks of Sweden, Norway, and Israel to see how CBDCs can be utilized for international remittance and retail payments.

Per the announcement:

“Project Icebreaker is a collaboration between the Bank of Israel, Central Bank of Norway, Sveriges Riksbank and BIS Innovation Hub Nordic Centre to develop a “hub” to which participating central banks will connect their domestic proof-of-concept CBDC systems.”

Since cross-border payments are accustomed to insufficient transparency, limited access, low speeds, and high costs, Project Icebreaker seeks to explore how central bank digital currencies (CBDCs) can bridge the gap.

Ideally, it will scrutinize the technological feasibility and specific key functions of interjoining various domestic CBDC networks. 

The project’s final report is scheduled for the first quarter of 2023, given that it will run till the end of the year.

Andrew Abir, the Bank of Israel Deputy Governor, noted:

“The results of the project will be very important in guiding our future work on the digital shekel.”

He added:

“Efficient and accessible cross border payments are of extreme importance for a small and open economy like Israel and this was identified as one of the main motivations for a potential issuance of a digital shekel.” 

According to a survey by Ripple, CBDCs have triggered overwhelming consensus among global finance leaders.

The study disclosed that more than 70% of them were certain that CBDCs would spur financial inclusion, Blockchain.News reported. 

Once rolled out, CBDCs are expected to drive the financial inclusion of nearly 1.7 billion people left out of the banking system. This is because CBDCs are digital assets pegged to real-world assets and backed by the central banks.

In May, 90% of apex banks have shown intentions of rolling out Central Bank Digital Currencies (CBDCs), according to a study by the Bank for International Settlements (BIS). More than 110 countries are currently at one stage or another of the CBDC development process, and many more are poised to join the trend. 

-With assistance with Annie Li-

 

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Sweden Prefers Using Electricity for Job Creation Activities than Bitcoin Mining

by Blockchain News

Sweden is at the crossroads of choosing to use electricity for job-creation projects or Bitcoin mining. The dilemma could be tough for this Northern European country to make a wise decision.

In an interview with Bloomberg, Khashayar Farmanbar, Sweden’s Energy Minister, stated that it is more important to offer electricity for job-creating projects such as steel plants than for Bitcoin mining firms that consume huge amounts of energy.

“We need energy for more useful things than Bitcoin, to be honest,” Farmanbar said in the interview that was published in Bloomberg media on Saturday. 

Last month, the Swedish government requested the energy agency – a government agency responsible for the supply and use of energy in the country – to track how much electricity is used for digital infrastructure, with a focus on cryptocurrency mining.

However, Farmanbar declined to talk about what measures the energy agency could take to limit crypto mining. The report shows that the energy ministry may prioritize new power users based on their ability to benefit society through job creation.

According to the Sweden Energy Agency, crypto mining does not come into the argument when the manufacturing sector is considered. Bitcoin mining is regarded as not creating as many jobs as other sectors, and its power consumption is a major threat to societal welfare.

Another option the energy ministry could consider introducing is cancelling tax incentives for particular data centres. The agency initially designed such taxes for traditional firms such as Microsoft and Meta Platforms. As a result, mining firms have also benefited from such incentives by default, but that is likely to change.

Protecting Environment

In January, Swedish government officials called on the EU to ban energy-intensive cryptocurrency mining methods proof of work, such as those used by Bitcoin.

The officials said such activities could not be tolerated at a time when all countries around the globe urgently need to reduce their energy consumption to combat the climate threat.

The government argued that Bitcoin mining is bad for the climate and worldwide efforts to convert the global energy system to renewables. According to Sweden, Bitcoin production deploying renewable sources is not environmentally friendly.

Months before Sweden’s proposal, China, which had dominated the crypto mining sector, moved and outlawed mining in the country. With China’s move, miners migrated worldwide, looking for cheap electricity and a friendlier regulatory environment. Currently, the U.S leads in the lion’s share of the global mining market, followed by Kazakhstan and Russia. But energy usage among crypto miners in such nations is still a big issue.

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ESMA Top Executive: The EU Should Ban Proof-of-Work Mining

by CryptoPotato

The vice-chair of the European Securities and Markets Authority (ESMA) – Erik Thedéen – urged the EU financial regulators to prohibit the cryptocurrency mining model known as proof-of-work. He also claimed that bitcoin has turned into a “national issue” for his homeland Sweden because of the amount of renewable energy devoted to mining the asset.

‘The Solution Is to Ban Proof-of-Work’

In a recent interview for the Financial Times, Erik Thedéen (also Director-General of Sweden’s FCA) opined that cryptocurrencies employing the proof-of-work mining methodology pose significant risks to the environment. As such, European regulators should encourage the proof-of-stake model, which is less energy-intensive:

“We need to have a discussion about shifting the industry to a more efficient technology. The solution is to ban proof-of-work. Proof-of-stake has a significantly lower energy profile.”

It is worth noting that the two largest digital assets by market capitalization – Bitcoin and Ether – rely on the proof-of-work mining technology. However, Ethereum is on its way to upgrading the network to Ethereum 2.0 as the transition is expected to happen this summer. Following the development, the second-largest blockchain protocol will start utilizing the proof-of-stake method and thus become more green-focused.

Bitcoin, though, has no plans to switch its mining model. Thedéen said the primary digital asset is now a “national issue” for Sweden because a considerable percentage of renewable energy is currently dedicated to mining it. The ESMA exec thinks Swedish electricity should be employed in creating traditional services and not BTC:

“It would be an irony if the wind power generated on Sweden’s long coastline would be devoted to bitcoin mining.”

Erik Thedéen
Erik Thedéen, Source: Nord News

The Good Side of BTC Mining

In October last year, the authorities of the Canadian town North Vancouver decided to employ the energy released from bitcoin mining into heating residential and commercial buildings. The initiative should see the light of day during the first half of 2022 as it was supported by the joint efforts of Lonsdale Energy Corporation (LEC) and the local digital asset miner MintGreen.

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The latter asserted that its “Digital Boilers” could prevent 20,000 tones of GHGs from entering the atmosphere per MW compared to natural gas.

In turn, Karsten Veng – CEO at Lonsdale Energy Corporation – raised hopes that the collaboration will be beneficial for the Canadian town, home to nearly 50,000 people, and for the environment:

“LEC is on a journey to lower greenhouse gas emissions, and this project will be part of that.”

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EU securities regulator calls for proof-of-work crypto mining ban

by Cointelegraph

Erik Thedéen, the vice-chair of the European Securities and Markets Authority has raised concerns over the growing use of renewable energy for Bitcoin mining.

In a recent interview with the Financial Times, Thedéen said that Bitcoin (BTC) mining has become a “national issue” and warned cryptocurrencies could pose a risk to climate change goals. 

He called upon European regulators to take special exception to proof-of-work mining which is primarily used by Bitcoin and a few other forked altcoins. He also advocated for proof-of-stake as a better, energy-efficient alternative:

“We need to have a discussion about shifting the industry to a more efficient technology.”

Melanion Capital, a Paris-based alternative investment firm, has addressed the growing call for a ban on PoW mining back in November 2021, called it “completely misinformed”

The investment firm said that due to the decentralized nature of Bitcoin, there is no lobby or group to defend its interests, which “should not be taken as an opportunity to implement measures rendering illegal an industry for its lack of defensive powers.”

Related: Swedish call to ban crypto mining ‘completely misinformed,’ says fund manager

The Bitcoin network’s energy usage was one of the most controversial topics in 2021 that saw the likes of Elon Musk, Jack Dorsey and Michael Saylor engage in several debates. Tesla even discontinued the Bitcoin payment option citing the Bitcoin network’s energy usage. However, unlike Thedéen, most of the critics until now had no issue with clean energy usage. Musk has claimed that if 50% of the Bitcoin network’s energy comes from renewable sources, Tesla would rethink adding a Bitcoin payment option.

China’s Bitcoin mining ban in May last year turned out to be a boon for the ecosystem, as it not only disintegrated the highly centralized Bitcoin mining industry, it also helped in moving towards renewable energy usage. According to the Q3 report from Bitcoin Mining Council, renewable energy usage by the Bitcoin network reached 58% by the third quarter of 2021.

Global Sustainable Energy Index Source: BMC Report