Central Bank

Swedish central bankers snipe Bitcoin mining, cite rampant energy use

A report by the Riksbank makes the case for banning Bitcoin mining in Sweden over proof-of-work energy consumption concerns; Bitcoin Twitter was quick to react.

Another day, another environmental attack on proof-of-work (PoW) mining. A report shared by the Swedish central bank argued that energy-intensive Bitcoin (BTC) and cryptocurrency mining should be banned. 

The Swedish central bank, known as the Riksbank, is the oldest central bank in the world. In a damning report entitled, “Cryptocurrencies and their impact on financial stability,” the bank had a crack at PoW cryptocurrency mining. PoW mining employs energy-guzzling data centers that solve puzzles to secure blockchains. The report stated:

“Recently, some extraction of crypto assets has been established in northern Sweden, where it consumes as much electricity as 200,000 households do on an annual basis.”

For Knut Svanholm, a Bitcoin author who recently penned  “∞/21M,” told Cointelegraph, “A central bank has no business telling people what they can and cannot do with their electricity.”

“If they really cared about the environment, they’d shut their own operation down for good tomorrow morning.”

The paper cites peers at the environmental agency and the Swedish Financial Supervisory Authority, equivalent to the United States Securities and Exchange Commission, in its examination of Bitcoin’s energy use: 

“The proof-of-work method, which is used to confirm transactions and extract new cryptocurrencies, should be banned in favor of other, less energy-intensive methods.”

Svanholm has a different take: “Bitcoin mining is guessing a number over and over again. […] As so many other Swedish institutions have done before them, they [the central bank] choose to comment on something that they don’t understand and have no business having even an opinion on.”

The report comes as little surprise, given that banks and governments regularly take aim at PoW energy use. The report also flies in the face of Bitcoin adoption in Sweden. Home to a number of Bitcoin startups, Sweden is advanced in terms of European Bitcoin adoption.

Prominent Swedish Bitcoiners, including Svanholm as well as Christian Ander, the founder of Swedish Bitcoin exchange BTX, were quick to refute the report on Twitter. Svanholm shared a Youtube video that argued that “none of the energy used for Bitcoin mining goes to waste.”

Ander called the report “highly inappropriate.” He tweeted:

“Energy consumption must be neutral, production must be regulated. Do not regulate what individuals do with it.”

As the bank’s friends at the International Monetary Fund march onward with a central bank digital currency — as it would use less energy — the figures for Bitcoin mining are stark. In late 2021, Bitcoin took first place as the cleanest industry in the world with its high renewable energy mix. In neighboring Norway, Bitcoin miners use 100% renewable energy, while Bitcoin miners worldwide strive to make the world a better place.

Related: Bitcoin’s real energy use questioned as Ethereum founder criticizes BTC

The proposed ban from the Swedish central bankers also lands concurrently with the publication of a report examining the energy efficiency of crypto transactions . The report stated:

“When Bitcoin Lightning layer is compared to Instant Payment scheme, Bitcoin gains exponentially in scalability and efficiency, proving to be up to a million times more energy efficient per transaction than Instant Payments.”

Bitcoin’s Lightning Network recently hit the 4,000 BTC milestone showing its promise as a payment solution. Lightning payments take place off-chain and use considerably less electricity than the Bitcoin miners that secure the network’s layer 1. 

Nonetheless, research from Cambridge Centre for Alternative Finance states that Bitcoin consumes an estimated 15GW of electricity each day. In meme-worthy material, back-of-the-napkin math from one Twitter user claims that clothes driers in the U.S. consume more energy: 

An Our World in Data report demonstrated that the global sports industry emits three times the emissions of the Bitcoin network. It begs the question, why do central banks continue to attack PoW’s energy usage? And which financial institution will fire the next shot? 

‘CBDCs are the natural evolution,’ says HyperLedger director Barbosa

In an interview filmed during the World Economic Forum in Davos, Daniela Barbosa gives the floor to enterprise blockchains and the future of currencies.

For Daniela Barbosa — general manager of blockchain, healthcare and identity at the Linux Foundation and executive director of Hyperledger — digital currencies and cryptocurrencies have made it among the big banks at the World Economic Forum in Davos. 

In an interview with Cointelegraph shot against the backdrop of the Swiss Alps, Barbosa explained that in the few years she has attended the WEF, the presence of cryptocurrency companies has steadily grown. What’s more, we should not be afraid of central bank digital currencies (CBDCs).

“CBDCs are [a]natural evolution of digital dollars and digital currencies.”

While the WEF saw calls from some bankers for a CBDC rollout to slow down, Barbosa explained that a CBDC could be with us in this decade.

Hyperledger’s work overlaps that of CBDCs, particularly in light of a partnership with the Digital Dollar Project. The nonprofit organization seeks to further the research into a U.S. CBDC. The key to CBDC implementation, however, is in succeeding with “privacy-preserving methods.”

An advocate for digital identity, privacy and “having control of your data,” Barbosa also shared the story of how she got into Bitcoin while living in San Francisco and working for Dow Jones in the mid-2010s.

“I did go to a [Bitcoin] meetup once and I was older than everybody else and also female—and I thought, maybe this is not for me?”

Fortunately, Barbosa kept abreast of Bitcoin and the market when time allowed before joining HyperLedger, an enterprise blockchain solutions-based company, in 2016.

Related: UN agency head sees ‘massive opportunities’ in crypto: WEF 2022

While blockchains can sometimes be touted as a catch-all solution, Barbosa explained that sometimes blockchains are not the ideal situation and “should not be used.” Many blockchain use cases in 2016 and 2017, for example, wanted the “media to pay attention.” In 2022, a blockchain works when:

“You want to use a distributed ledger when you have multi parties that are working together—you don’t want to have to create another middle layer than helps disintermediate all the assets going around.”

HyperLedger now covers everything from pharmaceuticals to finance while its blockchain solutions tackle climate change. 

Ugandan central bank U-turns on crypto, welcoming firms to regulatory sandbox

The bank advised the Blockchain Association of Uganda (BAU) to sharpen up its knowledge of the sandbox regulations, inviting its members along to further technical discussions.

The Bank of Uganda is open to the idea of cryptocurrency businesses participating in its Regulatory Sandbox, inviting members of the Blockchain Association of Uganda (BAU) to share their knowledge with the central bank.

A letter from the bank dated June 1 to the chairperson of the BAU, Kwame Rungunda, referred to a meeting between the two parties in early May. The central bank also advised the country’s crypto advocacy group to brush up on the sandbox regulations before it made time for further technical discussions.

In June 2021, the bank launched a regulatory sandbox framework allowing for financial technology (fintech) firms to test “innovative financial solutions” in a controlled environment in the hopes of promoting the uptake of electronic payments and other digital financial services within the country.

The recent letter appears to be a u-turn in the Bank of Uganda’s approach toward cryptocurrency.

In late April, the bank issued a warning regarding cryptocurrencies, sending a notice to all payment service providers in the country saying that by allowing crypto transactions they were opening the country to money laundering and scams.

It added that any provider, such as a bank or fintech business found to be facilitating the trade of cryptocurrencies would have their financial license revoked.

Crypto is not banned in Uganda and can still be purchased, held and traded. However, cryptocurrencies are not regulated and as of nowno firm has been issued a digital asset license to operate in the country.

Related: Venture funding for African crypto startups grew 11x in 2022: Report

Crypto adoption in Africa is heating up, catching the attention of many venture funds and crypto firms. Between 2020 and 2021, crypto use in Africa increased by nearly 1,200% and nearly 2% of Ugandans use crypto.

Around the continent, other countries are adopting a crypto-friendly approach, the Central African Republic became the first African country to adopt Bitcoin (BTC) as a legal tender and only the second country ever to do so.

The state-owned Kenyan energy company KenGen also invited Bitcoin miners to move to Kenya to buy up its excess power generated from geothermal energy so that its government could generate revenue through crypto mining fees or taxes.

Ugandan central bank u-turns on crypto welcoming firms to regulatory sandbox

The bank advised the Blockchain Association of Uganda (BAU) to sharpen up its knowledge of the sandbox regulations, inviting its members along to further technical discussions.

The Bank of Uganda is open to the idea of cryptocurrency businesses participating in its Regulatory Sandbox, inviting members of the Blockchain Association of Uganda (BAU) to share their knowledge with the central bank.

A letter from the bank dated June 1 to the chairperson of the BAU, Kwame Rungunda, referred to a meeting between the two parties in early May. The central bank also advised the country’s crypto advocacy group to brush up on the sandbox regulations before it made time for further technical discussions.

In June 2021, the bank launched a regulatory sandbox framework allowing for financial technology (FinTech) firms to test “innovative financial solutions” in a controlled environment in the hopes of promoting the uptake of electronic payments and other digital financial services within the country.

The recent letter appears to be a u-turn in the Bank of Uganda’s approach toward cryptocurrency.

In late April, the bank issued a warning regarding cryptocurrencies, sending a notice to all payment service providers in the country saying that by allowing crypto transactions they were opening the country to money laundering and scams.

It added that any provider such as a bank or fintech business found to be facilitating the trade of cryptocurrencies would have their financial license revoked.

Crypto is not banned in Uganda and can still be purchased, held, and traded. However, cryptocurrencies are not regulated, and a firm is yet to be issued a digital asset license to operate in the country.

Related: Venture funding for African crypto startups grew 11x in 2022: Report

Crypto adoption in Africa is heating up, catching the attention of many venture funds and crypto firms. Between 2020 and 2021 crypto use in Africa increased by nearly 1,200% and nearly 2% of Ugandans use crypto.

Around the continent, other countries are adopting a crypto-friendly approach, the Central African Republic became the first African country to adopt Bitcoin (BTC) as a legal tender and only the second country ever to do so.

The state-owned Kenyan energy company KenGen also invited Bitcoin miners to move to the country to buy up its excess power generated from geothermal energy, which could see its government generate revenue through crypto mining fees or taxes.

CBDCs can “kill” private crypto: India’s RBI deputy governor to IMF

“One of the reasons it is so successful is because it’s simple,” he added while comparing the Unified Payments Interface’s (UPI) growth with blockchain technology.

In discussion with the International Monetary Fund (IMF), T Rabi Sankar, the deputy governor of the Reserve Bank of India (RBI), reflected an anti-crypto stance as he spoke about India’s potential to disrupt the crypto and blockchain ecosystem. 

Rabi Sankar started the conversation by highlighting the success of the Unified Payments Interface (UPI), India’s in-house fiat-based peer-to-peer payments system — which has seen an average adoption and transaction growth of 160% per anum over the last five years.

“One of the reasons it is so successful is because it’s simple,” he added while comparing UPI’s growth with blockchain technology. According to Rabi Sankar:

“Blockchain, which was introduced six-eight years before UPI started, even today is being referred to as a potentially revolutionary technology. [Blockchain] use cases haven’t really been established that much at the speed it initially was hoped for.”

However, the RBI official confirmed that a large population in India still lacks access to UPI-based banking due to the unavailability of smartphones. To counter this, the Indian government is working on offline payment platforms, some of which have started rolling out to the masses.

Rabi Sankar also stated that banks will remain crucial for providing liquidity services to the general public in India, warning that technology is merely a tool and cannot be used to create currencies:

“A currency needs an issuer or it needs intrinsic value. Many cryptocurrencies which are neither are still being accepted at face value. Not just by gullible investors but also the experts, policymakers or academicians.”

He further stated that RBI does not believe that stablecoins, like Tether (USDT), should be accepted blindly as 1-to-1 fiat pegged currencies. Speaking about the advantages of a digital rupee, Rabi Sankar said:

“We believe that central bank digital currencies (CBDCs) could actually be able to kill whatever little case that could be for private cryptocurrencies.”

Related: India to roll out CBDC using a graded approach: RBI Annual Report

On May 28, India’s central bank, RBI, proposed a three-step graded approach for rolling out CBDC “with little or no disruption” to the traditional financial system.

As Cointelegraph reported, finance minister Nirmala Sitharaman first revealed the plan to launch a CBDC in 2022-23 with an aim to provide a “big boost” to the digital economy. RBI’s report revealed that the central bank is currently experimenting to develop a CBDC that addresses a wide range of issues within the traditional system.

CBDCs can “kill” private crypto: India’s RBI deputy governor to IMF

“One of the reasons it is so successful is because it’s simple,” he added while comparing the Unified Payments Interface’s (UPI) growth with blockchain technology.

In discussion with the International Monetary Fund (IMF), T Rabi Sankar, the deputy governor of the Reserve Bank of India (RBI), reflected an anti-crypto stance as he spoke about India’s potential to disrupt the crypto and blockchain ecosystem. 

Rabi Sankar started the conversation by highlighting the success of the Unified Payments Interface (UPI), India’s in-house fiat-based peer-to-peer payments system, which has seen an average adoption and transaction growth of 160% per anum over the last five years.

“One of the reasons it is so successful is because it’s simple,” he added while comparing UPI’s growth with blockchain technology. According to Rabi Sankar:

“Blockchain, which was introduced six-eight years before UPI started, even today is being referred to as a potentially revolutionary technology. [Blockchain] use cases haven’t really been established that much at the speed it initially was hoped for.”

However, the RBI official confirmed that a large population in India still lacks access to UPI-based banking due to the unavailability of smartphones. To counter this, the Indian government is working on offline payment platforms, some of which have started rolling out to the masses.

Rabi Sankar also stated that banks will remain crucial for providing liquidity services to the general public in India, warning that technology is merely a tool and cannot be used to create currencies:

“A currency needs an issuer or it needs intrinsic value. Many cryptocurrencies which are neither are still being accepted at face value. Not just by gullible investors but also the experts, policymakers or academicians.”

He further stated that RBI does not believe that stablecoins, like Tether (USDT), should be accepted blindly as 1-to-1 fiat pegged currencies. Speaking about the advantages of a digital rupee, Rabi Sankar said:

“We believe that central bank digital currencies (CBDCs) could actually be able to kill whatever little case that could be for private cryptocurrencies.”

Related: India to roll out CBDC using a graded approach: RBI Annual Report

On May 28, India’s central bank, RBI, proposed a three-step graded approach for rolling out CBDC “with little or no disruption” to the traditional financial system.

As Cointelegraph reported, finance minister Nirmala Sitharaman first revealed the plan to launch a CBDC in 2022-23 with an aim to provide a “big boost” to the digital economy. RBI’s report revealed that the central bank is currently experimenting to develop a CBDC that addresses a wide range of issues within the traditional system.