Could the EU Ban Bitcoin to Meet Energy Goals?
Social media X is abuzz with speculation on whether Proof-of-Work (PoW) consensus networks, like Bitcoin, may be banned in the European Union (EU) following the release of a draft assessment by the European Comission and the European Central Bank (ECB).
Daniel Batten, a managing partner at CH4 Capital, shared on his X (formerly Twitter) profile that the ECB and European Securities and Markets Authority (ESMA) were assigned to craft the report.
The EU’s Stance on Bitcoin Energy Consumption
In a screenshot Batten shared, the EU report presents an alarming assessment of Bitcoin and other PoW blockchain protocols. Suggesting a possible ban on Bitcoin and its mining processes in the region, the analysis highlighted that they are environmentally harmful due to their high energy demands.
The report added that this unsafe mining process could threaten the EU’s energy security. These recent remarks tie into a 2023 ‘eTender’ submission titled ‘Developing a Methodology and Sustainability Standards for Mitigating Environmental Impacts of Crypto Assets.’
🧵While we were sleeping, the European Commission (via ESMA & ECB) has been creating a report which they plan to label bitcoin
-environmentally harmful
-a threat to EU energy security
-a haven for financial criminalsPaving the way for 2025 de facto EU bans on BTC & BTC mining pic.twitter.com/Zj9er7E4V9
— Daniel Batten (@DSBatten) January 31, 2024
The eTender report noted that the surge in crypto asset mining generates adverse economic and social consequences. Additionally, its persistent use could hinder the region’s sustainability goals in line with the Paris Agreement.
Hence, eTender would focus on providing actionable steps to mitigate the impact of cryptocurrency mining and develop specific sustainability standards.
Sharing its expected measures, the EU Commission revealed that it would level a carbon tax on crypto mining. This would be based on the network’s consensus mechanisms and possible environmental impacts. The endgame is to coerce miners to lower their mining activities or stop them completely.
Other measures include granting EU bloc members the authority to ‘shut off’ crypto mining for energy security at any time. Bitcoin mining will also be formally labeled as ‘harmful to the environment,’ and the EU will devise means to disincentivize institutional investment in Bitcoin.
According to Batten, Bitcoin is expected to be designated as a ‘haven for financial criminals, ‘ making it even less appealing to prospective investors.
Could EU Measures Be Adopted Worldwide?
According to Batten, the EU’s crypto asset’s potential mining ban is not expected to be siloed to the region again. The ESMA and the ECB have reportedly revealed that if the ban is legalized in the EU bloc, they will push for it to be accepted in other regions.
If the bill is enacted, this move could see Bitcoin mining capitals like the US close down publicly listed Bitcoin mining firms like Riot Blockchain.
3/5
I'm not in EU, who cares?
ESMA, who work closely with ECB (Euro Central Bank), has signalled that once the report is accepted in EU, they will push for it to become the standard in other nations
Like other wars, this war starts in EU but may not end there.
— Daniel Batten (@DSBatten) January 31, 2024
The outrage surrounding Bitcoin’s mining electricity demands is no novel discourse in the crypto space. The PoW blockchain network reportedly consumes more electricity than a small-sized country.
Industry practitioners and experts have largely supported this view, however, which led to the formation of the Bitcoin Mining Council (BMC).
The BMC is focused on transitioning the energy demands of the PoW protocol to a more environmentally friendly option. So far, they have been successful.
According to a K33 Research, Bitcoin miners power their operations with an estimated 58% renewable energy sources. This is three times higher than the world’s average.
Since #Bitcoin miners have economic incentives to utilize renewable energy, their sustainable power mix is estimated to be 58% – almost three times higher than the world average.
Learn more in our weekly market report: https://t.co/tj905x0elW pic.twitter.com/D2kI4f8Nj1
— K33 Research (@K33Research) October 29, 2021
This indicates that Bitcoin mining will become greener by the year.
