On March 14, 2022, the Economic and Monetary Affairs Committee (ECON) decided to reject the use of “proof of work” regarding the mining of cryptocurrencies on the European Commission’s proposal regarding the Markets in Crypto-assets (MiCA) that well known as Bitcoin and Ethereum. In addition, MiCA was voted in order to conduct a “Proposed Regulation”.
Additionally, One of the Economic and Monetary Affairs Committee (ECON) mentioned that Proof-of-Work mining may be considered by some to be potentially environmentally damaging, using a large amount of energy rather than using it for public uses. Additional amendments have been made to limit proof-of-work usage, which uses tremendous amounts of energy. Simultaneously, Stefan Berger, one of the Economic and Monetary Affairs Committee (ECON), took issue with another the Economic and Monetary Affairs Committee (ECON) that he didn’t believe that MiCA would be able to be assisted in technology together with energy use since the main objective of MiCA aimed only at Crypto-assets.
On March 23, 2022, the European Parliament published the text of a report adopted on March 14, 2022, which the draft Proposed Regulation included three main elements for ensuring uniformity in regulating crypto-assets within the EU in order to continue using cryptocurrencies. The draft Proposed Regulation contained; first, having a uniform legal framework for crypto-assets; second, protecting consumers and safeguarding against market manipulation and financial crime; and finally, including crypto-assets mining within the EU taxonomy for sustainable activities.
The final latest draft of the Proposed Regulation found that only 2 elements passed, which are Uniformity and Consumer Protection Elements, Nevertheless, The other elements didn’t pass which is Proof of Work, regarding sustainability in the context of mining, was voted out of the Proposed Regulation. The vice chair of the European Securities and Markets Authority (ESMA) called for a ban on “proof of work” in January 2022 due to environmental concerns. In addition, the crypto industry has been trying to solve its environmental problems for years. The Ethereum network has planned — and delayed — a move from “proof of work” to a different process called “proof of stake” that nixes puzzle-solving. Proof of stake uses a lot less energy, and is considered more environmentally friendly. Such a move would solve the energy efficiency problem for Bitcoin, too. But no one really expects Bitcoin to follow suit, since all the miners on the network would need to agree to eat losses from dumping the hardware they’ve already invested in to mine Bitcoin.
Some proponents of proof of work also argue that it’s the most secure mechanism for maintaining the integrity of the blockchain. Without buy-in from miners, any ban on proof-of-work is essentially a ban on Bitcoin.
Then, On March 25, 2022, Stefan Berger tweeted that The EU Parliament “has paved the way for innovation-friendly crypto regulation that can set standards worldwide.”
New York Digital Investment Group (NYDIG) reported research about carbon dioxide (CO2) emission found that Bitcoin emits only below 0.5% of CO2 compared to all industries. It might be indicated that concerns about environmental damage by wasting energy are likely to be exaggerated.
Published 11/04/2022
By Ashley Jones
