Key Takeaways:
- Draft legislation that would restrict the bitcoin mining market and promote the use of proof-of-stake-based cryptocurrencies is about to be released by the EU.
- In relation to the Russian invasion of Ukraine, which had a significant impact on European energy supplies, the REPowerEU Plan was unveiled in May.
The European Union has framed a draft legislation restricting the bitcoin mining market and promoting the use of proof-of-stake-based cryptocurrencies.
On October 18, the European Union (EU) made available a set of documents relating to an implementation action plan for the European Green Deal and the REPowerEU Plan, both of which aim to reduce energy consumption by digitizing the energy industry. Crypto miners and a plethora of other energy users are targets for the European energy planners.
In response to concerns about high energy costs, blackouts, and shortages brought on by the disruption of Russian gas supplies, the EU is also creating an energy-efficiency label for blockchains.
According to the European Commission, the Russian crisis provided an opportunity to “fast forward the clean transition.” A key component of the strategy is “controlling the energy consumption of the ICT sector,” which specifically targets blockchains as a subset of data centers.
In a document released on Tuesday, the commission stated that “the [EU] member states must also be ready to stop crypto-assets mining in case there is a need for load shedding in the electricity systems.” In order to prevent the collapse of the entire grid, load shedding is the act of intentionally cutting off supply to a specific group of users by energy providers.
According to reports, the European Commission is collaborating with foreign partners to develop a grading system that encourages more environmentally friendly cryptosystems, like proof-of-stake.
In addition, EU members will be urged to stop providing tax breaks to bitcoin miners and must be prepared to halt all mining activities in the event of a power outage. As per the data, Europe accounts for 10% of global proof-of-work mining.
In the long run, “it is also critical to end current tax breaks and other fiscal measures benefiting crypto miners in certain member states,” according to the commission.
Crypto’s consumption has risen 900% in five years, reaching around 0.4% of global electricity consumption, according to the commission, which promises another report on the topic by 2025, which could suggest additional steps to reduce crypto’s energy consumption.
The Bitcoin Mining Council, which includes Jack Dorsey, Michael Saylor, and Fidelity Investments, wrote an open letter to US lawmakers debunking many of the myths about bitcoin and energy use.
Following the open letter, Michael Saylor published a paper debunking myths about Bitcoin and energy consumption.
The energy consumption of proof-of-work technology, which uses computing power to mine new bitcoin, has attracted the attention of officials. While the White House has called for new industry standards in the United States, EU lawmakers were on the verge of adjusting crypto legislation to enforce a bitcoin ban.
