Limiting the environmental impact of crypto mining has been one of the pressing issues facing countries and regional bodies. It’s a well-known fact that Proof-of-Work activities are energy-consuming and hurt the climate, which world leaders are clamoring to save. This has called on the attention of the European Union.
According to reports, the regional body is drafting regulations that could see proof-of-work activities banned across member states amid growing concerns of power disruption. Bitcoin and Ethereum 1.0 use the Proof-of-Work consensus mechanism. The proposal is part of the EU’s MiCA, which aims to regulate digital currencies in the region.
Crypto Mining Issues in the European Region
Some member states have made widespread calls to prohibit crypto mining completely. Sweden, for example, has called on for the complete ban on BTC mining, accusing it of threatening its climate target.
Last November, the Financial Supervisory Authority said the country is on the verge of transitioning to green energy targeted by miners for its services and to improve climatic conditions. The regulator stated that bowing to the needs of crypto miners will ruin its target and jeopardize its Paris Contract.
The same concerns were voiced by Erik Thedeen, the current serving DG of Sweden’s FSA and the then vice-chair of the European Securities and Markets Authority. While the body called for the total ban of the power-draining activity, Thedeen suggested something else.
Last month, Erik Thedeen said BTC mining was a national issue but called for the industry to adopt energy-efficient technology. To him, banning crypto mining wasn’t the ideal solution, given that many financial institutions are into cryptocurrency.
Adverse Effects of Proof-of-Work Activities
A Cambridge University survey disclosed that Bitcoin utilizes approximately 120 terawatt-hours of power every year. That’s equivalent or even more than the electricity consumed by some countries like Belgium, The Netherlands, and Argentina annually.
A 2020 survey organized by the same university discovered that only about 39% of Bitcoin mining was powered by green energy. Also, reports found out that Bitcoin’s annual greenhouse emissions were equal to sixty billion pounds of burned coal.
The reported lack of sustainable energy for mining is becoming a cause of concern, which has hindered the adoption of bitcoin. Billionaire businessman and CEO of Tesla Elon Musk once stated that his reason for stopping BTC payments was the lack of sustainable energy for mining the cryptocurrency. He concluded that Tesla would begin accepting BTC payments again if the mining energy expended was 50% renewable.
Yet, some critics opine that using renewable energy for crypto mining is a waste of time and resources, given the minute amount utilized. To many, it’s a misuse of valuable resources.