Hungary Central Bank Calls for Crypto Mining and Trading Ban
Negative chatter from governments and regulators across the world continue to hit the crypto news wires. Governments and regulators have started to look beyond crypto trading, with crypto mining also becoming a hot topic.
EU Call for Proof-of-Work Mining Ban
Just last month, European Securities and Markets Authority (ESMA) vice chairman Erik Thedeen called for a ban on Proof-of-Work (PoW) mining. Theeden talked of the significant risks that mining poses to the environment. The ESMA vice chair added that EU regulators should encourage more environmentally friendly Proof-of-Stake (PoS) mining due to its lower energy profile.
Following China’s ban on Bitcoin (BTC) mining in 2021, governments and government agencies had been silent on crypto mining. The landscape has changed at the turn of the year, however. Theeden’s comments had come ahead of a U.S sub-committee hearing on crypto mining and the environment. Aligned with Theeden, U.S lawmakers were also in favor of PoS for its more favorable energy profile.
Some key statistics shared during the hearing came into question in recent weeks, however. At the start of the month, CoinShares released a report on crypto mining that provided a very different set of PoW mining statistics. The numbers suggest that independent research into PoW mining is needed. There may also be suggestions of a political campaign against Bitcoin. Some could have considered last month’s subcommittee hearing on Capitol as an anti-Bitcoin hearing.
CoinShares Questions U.S Government Mining Statistics
Some key stats from the CoinShares report had included:
- The U.S and China had emitted 5,830 metric tons (Mt) and 11,580 Mt of CO2 emissions in 2016 respectively.
- The Bitcoin mining network emitted 36 Mt of CO2 in 2020 and 39 Mt in 2021. This accounts for less than 0.08% of a global total 49,360 Mt CO2 emissions.
- Emissions estimates for minting and printing fiat currency sit at approximately 8 Mt of CO2 emissions per year.
- The gold industry is estimated to generate between 100 and 145 Mt of CO2 emissions annually.
- For the global banking system, power usage estimates sit at 264 TWh (2019). This translates to 130 Mt of CO2 emissions each year.
The sub-committee briefing memorandum, however, stated that global 2021 CO2 emissions of ETH and BTC mining is equivalent to tailpipe emissions from more than 15.5m gasoline powered cars on the road every year. A single ETH transaction reportedly added more than 90 pounds of CO2, with BTC adding more than 1,000 pounds of CO2 into the atmosphere.
Based on these figures and figures from the United States Environmental Protection Agency (EPA), a typical passenger car emits around 4.6 Mt of CO2 per year. That puts the U.S government’s crypto mining annual CO2 emissions at 71.3 million metric tons. This sits well below emissions from both the banking and gold industries.
According to Cambridge Centre for Alternative Finance, the U.S accounted for 35.4% of the global hashrate in August 2021. Based on these numbers, total CO2 emissions from Bitcoin mining globally would be approximately 185 million Mt. The global figure sits well below CO2 emissions from U.S oil and gas facilities. According to Statista, CO2 emissions hit 316 million Mt in 2020, down from 347.4m Mt in 2019.
U.S Agencies Join U.S Government in Rasing the Alarm on Bitcoin Mining
Even considering the U.S government numbers, Bitcoin’s impact on the environment is modest relative to other industries. In spite of this, the Inland Revenue Services in the U.S sided with PoS miners, with Fitch Ratings also raising concerns over Bitcoin mining and the environment.
It comes as little surprise, therefore, that other countries are jumping on the anti-PoW mining bandwagon.
Hungary’s Central Bank Calls for Ban on Crypto Trading and Mining
On Friday, Governor Gyorgy Matolcsy proposed a European-wide ban on crypto trading and mining. The central bank governor referenced China’s crypto ban and the Bank of Russia’s proposed ban on crypto trading and mining. He also stated “It is clear-cut that cryptocurrencies could service illegal activities and tend to build up financial pyramids”.
Matolcsy went on to call on the EU to pre-empt the build-up of new financial bubbles and pyramids. He also suggested that EU citizens and companies could own cryptos overseas.