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Europe-based crypto mining firms could be facing regulatory challenges ahead. European Union (EU) are reportedly preparing for discussions on proposed crypto regulations that may result in a ban on the mining of Bitcoin (BTC), Ether (ETH), and other energy-intensive cryptos across the bloc’s 27 member nations.
The proposal is part of the upcoming Markets in Crypto Assets (MICA) legislation that will govern the regulation of cryptocurrencies in the European Union. The proposed MICA regulatory package includes a provision that could limit the use of the consensus mechanism known as proof-of-work (PoW) across the bloc’s member nations, according to a draft seen by Coindesk.
EU regulators are becoming increasingly concerned over the environmental impact of proof-of-work mining of crypto, according to Decrypt. PoW crypto mining is an energy-intensive mechanism used in mining Bitcoin (BTC) and Ethereum (ETH).
“Sweden needs the renewable energy targeted by crypto-asset producers for the climate transition of our essential services, and increased use by miners threatens our ability to meet the Paris Agreement, , Sweden’s financial supervisory authority Finansinspektionen said in November last year. “Energy-intensive mining of crypto assets should therefore be prohibited.”
European Securities and Markets Authority vice-chair Erik Thedeen also aired the same concern. “We need to have a discussion about shifting the industry to a more efficient technology,” he told the Financial Times in January. “The financial industry and a lot of large institutions are now active in cryptocurrency markets, and they have [environmental, social and governance] responsibilities,”
As the call to impose a bloc-wide ban on crypto mining gained momentum, crypto advocates expressed their concern that regulators might be rushing into a ban when regulations would have sufficed. EU parliamentarian Stefan Berger, who is responsible for the MICA legislative package’s procedure and content, noted that the debate on crypto mining’s energy usage issue has escalated.
“The Greens and Socialists, as you can imagine, are criticizing the proof-of-work concept and criticizing the energy use, saying that bitcoin needs more energy than the Netherlands,” Berger said. However, he opined that MICA is not the setting for settling the energy issue as its main purpose is to regulate crypto as assets.
