BODEN, Sweden – Nestled in the snowy white Swedish Lapland lies a modern-day gold mine. But instead of picks and shovels, it was filled with thousands of computers.
These machines, called mining rigs, are working around the clock to find new units of cryptocurrency – in this case, ethereumthe second largest token globally.
To do so, they must compete with others all over the world to find the answer to a complex mathematical puzzle, which becomes more and more difficult as more and more computers, called “miners”, join the network. The purpose is to ensure system security and prevent fraud.
This ethereum mining facility is run by Hive Blockchain, a company focused on using clean energy to mine cryptocurrencies.
Benjamin Hall | CNBC
This whole process is underpinned by something called “proof of work”. And it uses a tremendous amount of energy. Bitcoin, the world’s largest digital currency, also uses this framework. It now consumes as much energy as an entire nation.
Governments around the world are increasingly concerned. Some countries, such as China, have gone so far as to Cryptocurrency Mining Ban right.
Switch to renewable energy
The mine in question, a warehouse-like building located in the military town of Boden, has a total of 15,000 of these mining rigs. At 86,000 square feet, it’s bigger than a standard football field.
The establishment is run by Hive Blockchaina Canadian company focused on using green and renewable energy to mine cryptocurrency.
At 86,000 square feet, Hive’s Swedish mining facility is bigger than a standard football field.
Benjamin Hall | CNBC
Hive’s operations in Sweden are provided by a local hydroelectric power station in Boden, in the north of the country. The area is famous for its surplus of cheap, renewable electricity.
Johan Eriksson, Hive consultant, said: “In the north of Sweden, 100% of electricity is hydroelectric or wind energy. “It’s 100% renewable.”
Eriksson said cryptocurrency miners are using excess energy capacity that would otherwise go to waste — in other words, it is not being demanded by households in the region.
But the vast amount of energy needed to run operations like Hive’s has alarmed officials.
These machines, called mining rigs, work around the clock to find new units of cryptocurrencies.
Benjamin Hall | CNBC
Finansinspektionen, the Swedish financial watchdog, is calling on the European Union to ban cryptocurrency mining due to its overwhelming energy use.
“Crypto-asset producers want to use more renewable energy and they are increasing their presence in the Nordic region,” the agency said in a statement. declare last year.
“Sweden needs renewable energy targeted by crypto asset producers for the climate transition of our essential services and the increased use of threatening miners.” our ability to meet the Paris Agreement.”
Is decarbonization enough?
Edinburgh-based crypto company Zumo is part of the Crypto Climate Compact, a coalition of companies that aim to achieve net-zero emissions in the crypto industry by 2030.
Kirsteen Harrison, Zumo’s climate policy advisor, says the initiative is working on a piece of software that can verify the source of energy used in cryptocurrency mining is renewable.
“There’s quite a bit of experimentation going on with that at the moment,” she said. “If that succeeds, then hopefully that filters out the rest of the field.”
Simplifying the production of cryptocurrencies may not be enough, according to some activists.
Greenpeace and other environmental groups are calling for the bitcoin community to replace its proof-of-work mechanism instead, with a so-called “proof of stake”. That would eliminate the huge computational cost of verifying new crypto transactions.
Ethereum is currently in the midst of an extended transition to proof of stake, a move advocates say will reduce its energy consumption by more than 99%. And other cryptocurrencies, like cardano and solan, already operate on the proof-of-stake network.
However, as Harrison explains, moving a cryptocurrency like bitcoin away from the proof of work is easier said than done.
“I don’t believe there is an option to remove the proof of work, precisely because no single player has control over the system,” she said.
Not everyone on board
While Hive and other crypto companies are increasingly turning to green energy to power their operations, there are still plenty of other companies that have not yet begun to transition to renewable energy.
Some are intentionally use gas such as will flare to generate electricity for cryptocurrency mining.
Since China banned crypto mining, bitcoin advocates have hoped this will make the cryptocurrency greener.
But one peer-reviewed research released in February shows that bitcoin mining is only getting dirtier in 2021, with miners actually flocking to areas more dependent on coal and other fossil fuels, including including Kazakhstan and the southern US states of Texas and Kentucky.
Part of the problem is the decentralized nature of cryptocurrencies like bitcoin. While there are now various groups claiming to represent the industry, bitcoin has no central authority and anyone can join the network.
