EU Revises Legislation Targeting Proof-of-Work Crypto Mining

Key Takeaways

  • A European regulation that proposes restrictions on environmentally unsustainable consensus mechanisms has been revised.
  • That regulation might have conceivably restricted the usage of Bitcoin and different mining-based cryptocurrencies previous to revision.
  • Stefan Berger, a member of the European Parliament, confirmed that the related textual content has been eliminated.

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A bit of European regulation has been revised to take away language that proposed a ban on mining-based cryptocurrencies.

MiCA Regulations Targeted Crypto Mining

Language in a chunk of laws that was interpreted as problematic for Bitcoin and different Proof-of-Work cryptocurrencies has been eliminated.

The regulation in query is Markets in Crypto-Assets (MiCA), which proposes rules round the usage of cryptocurrencies. The regulation was first proposed by the European Commission in September 2020.

The preliminary model of the regulation stated that, starting in 2025, cryptocurrencies created and admitted within the EU ought to “not be based mostly or depend on environmentally unsustainable consensus mechanisms.” It additionally says that these mechanisms ought to “adjust to minimal environmental sustainability requirements.”

That language would seemingly impose a Europe-wide ban on cryptocurrencies that depend on Proof-of-Work or mining, a apply that’s famous for its excessive power calls for.

Bitcoin, which makes use of over 170 terawatt-hours (TW/h) of power per 12 months, would presumably fall underneath that rule.

Other mining-based blockchains and cryptocurrencies—together with Ethereum, Dogecoin, Litecoin, and Bitcoin Cash—would presumably fall underneath the identical rule as effectively,though these cryptocurrencies use significantly much less power than Bitcoin itself.

Restrictive Rule Has Been Revised

Now, the rule limiting ecologically intensive cryptocurrency mechanisms has now been faraway from the regulation, in keeping with German-language crypto information website BTC Echo.

Stefan Berger, a member of the European Parliament, confirmed the revision:

“The paragraph is not within the textual content. The report has but to be voted on in committee. In this vote, we are going to then see the place the majorities lie. The determination has not but been made.”

Berger additionally advised The Block that the following vote is about to happen between mid-March and early April. If authorised, the regulation will face additional voting and debates earlier than it takes impact.

Despite the regulation’s obvious objective of limiting cryptocurrency use within the EU, it’s unclear whether or not it’s going to really have the ability to accomplish that objective. Most cryptocurrencies are designed to be transferred between peer wallets, which means that governments can at finest limit exchanges, custodial wallets, and different centralized providers.

Disclosure: At the time of writing, the creator of this piece owned BTC, ETH, and different cryptocurrencies. 

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About the Author: Daniel