EU parliament committee rejects crypto proof-of-work ban

Steffy Bogdanova
March 15, 2022 9:20 am

The EU Parliament’s Committee on Economic and Monetary Affairs has rejected the proposed bill that would have effectively banned Bitcoin and many other cryptocurrencies in the European Union over their energy consumption.

The proposed rule was aimed at banning the energy intensive Bitcoin’s proof-of-work (PoW) mining as part of the Markets in Crypto Assets (MiCA) bill.

The vote was expected to be very close, supported by Green and other parliamentary groups. The rule could still be added as an amendment if the bill goes through.

Some of the most popular cryptocurrencies use PoW including Bticoin, Ethereum’s ether, Litecoin, bitcoin cash, and dogecoin. However, some of the newer cryptos developed in the last few years, use proof-of-stake (PoS) which is much less energy intensive.

Ethereum, which is on second place by market capitalisation, as well as by energy use, is switching to PoS soon with its 2.0 version. The decision was mostly influenced by the need to improve scalability and effectiveness as its mechanism can be tediously slow.

Bitcoin, however, is unlikely to follow suit as it has no other reason to switch to PoS.

The committee voted to add cryptocurrencies that use PoW to the EU sustainable finance taxonomy which decides whether something can be labelled environmentally friendly by the end of 2024.

Last year, the Swedish FI called for ban of energy-intensive crypto mining warning that cryptocurrencies are a threat to the climate transition. Mining for cryptocurrencies requires immense amounts of electricity and produces substantial CO2 emissions, the regulator reminded.

Produces of cryptocurrencies have a growing presence in the Nordic region, because of the renewable energy. However, the immense energy consumption needed for crypto mining is threatening Sweden’s ability to meet the Paris Agreement.

Last year, carbon concerns provoked stricter supervision for China’s bitcoin mining industry.

LeapRate Analyst

Experienced writer and journalist, working in the global online trading sector, Steffy is the Editor of LeapRate. She has previous experience as a copywriter and has been with the company since January 2020. Steffy has a British and American Studies degree from St. Kliment Ochridski University in Sofia.
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