EU Revises Legislation Targeting Proof-of-Work Crypto Mining

Key Takeaways

  • A European legislation that proposes restrictions on environmentally unsustainable consensus mechanisms has been revised.
  • That legislation may 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 Laws Focused 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 legislation in query is Markets in Crypto-Property (MiCA), which proposes laws round the usage of cryptocurrencies. The legislation was first proposed by the European Fee in September 2020.

The preliminary model of the legislation stated that, starting in 2025, cryptocurrencies created and admitted within the EU ought to “not be primarily based 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 follow that’s famous for its excessive vitality calls for.

Bitcoin, which makes use of over 170 terawatt-hours (TW/h) of vitality per yr, would presumably fall below that rule.

Different mining-based blockchains and cryptocurrencies—together with Ethereum, Dogecoin, Litecoin, and Bitcoin Money—would presumably fall below the identical rule as effectively,though these cryptocurrencies use significantly much less vitality than Bitcoin itself.

Restrictive Rule Has Been Revised

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

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

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

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

Regardless of the legislation’s obvious purpose of limiting cryptocurrency use within the EU, it’s unclear whether or not it would truly be capable of accomplish that purpose. Most cryptocurrencies are designed to be transferred between peer wallets, which means that governments can at finest prohibit exchanges, custodial wallets, and different centralized companies.

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

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