The legal status of bitcoin mining in the EU is based on the results of today’s vote in the European Parliament’s Committee on Cryptocurrency Markets (MiCA).
A controversial line regarding “minimum environmental sustainability” of crypto mining has been reintroduced in the bill after it was previously deleted. The new line will require blockchain operators to submit a distribution plan that describes how they will meet the requirements for environmental sustainability. Failure to submit a plan could lead to a ban on mining or coin trading in the EU.
Although not specifically mentioned, the law will directly affect Proof of Work (PoW) chains. PoW is a consensus algorithm used by the Bitcoin network, Ethereum and some other cryptocurrencies.
However, since Bitcoin (BTC) is decentralized, no distribution plan can be issued in the name. The absence of such a plan could threaten the existence of bitcoin mining in the EU.
According to last year’s data from Cambridge University and Statista, the EU accounts for about 12-14% of the global computing power of the Bitcoin network, with the majority from Germany and Ireland.
Concerns about energy consumption and carbon emissions from bitcoin mining are now at the forefront of the debate on how the EU should regulate it. However, these concerns seem misplaced when faced with raw data.
From August 2021, the Bitcoin network required 90.86 TWh of energy per year, according to a report from the Frankfurt School in November last year. This constitutes approximately 0.05% of the world’s total consumption. The grid represents only around 0.08% of total global carbon emissions, although these figures are difficult to calculate accurately.
French MP Pierre Pearson warned that a mining ban would drive talent and innovation out of the region. In a tweet on Saturday, he said that by banning Bitcoin and Ether (ETH) and “making it difficult to use NFTs and DeFi, the European Parliament is establishing our monetary and financial sovereignty.”
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If the bill is passed as it is, Ethereum will not be active for long. This year, the network is expected to complete a “merger” of Ethereum 2.0 with a Proof-of-Stake (PoS) network that does not require physical mining rigs to achieve network consensus. However, it could have more serious consequences for bitcoin miners.