Officials from the European Union (EU), discussed ban Bitcoin trading in a debate about a proposal to ban Proof of Work mining, according to documents obtained via a Freedom of Information request.
A report by Netzpolitik, a German digital culture organization, suggests that EU officials suggest that a complete ban on Bitcoin trading (BTC) be implemented to reduce its overall energy consumption.
One document that contained minutes of a meeting between the EU and Sweden’s financial regulator and an environmental protection agency, in which officials suggested that regulators could pressure the Bitcoin community into switching to a Proof of Stake (PoS), instead of the energy-intensive Proof of Work(PoW). This was the most concerning comment from the perspective of the crypto community. Unidentified officials said in the discussion:
“Ethereum moved [to PoS] due to its community…if Ethereum can shift, we could legitimately ask for the same from BTC. Other crypto coins that are viable must be ‘protected’. We don’t believe there is a need to “protect” the Bitcoin community.
Unnamed speakers suggested that the EU could ban trading in crypto assets that use a PoW algorithm.
Although the answer was not given in the document, it highlights the fact that the EU was considering such a drastic regulation.
Officials were not concerned about the possible impact of a complete Bitcoin ban on retail traders and investors. They claimed that all Bitcoin investors are aware of the downside risks.
“Participants in BTC fully understand the volatility of the currency/investment risks. We don’t need any additional protection.”
This report is timely as Bitcoin’s energy consumption continues to attract attention from regulators and environmental organizations. According to the University of Cambridge’s Bitcoin Electricity Consumption Index (Bitcoin Electricity Consumption Index), Bitcoin mining consumes approximately 139 terawatthours (Twh) of electricity each year. Statista estimates that the UK used 265 Twh of electricity in 2021.
Chris Larsen, co-founder of Ripple, joined forces with Greenpeace at the end March to press Bitcoin to change its consensus mechanism from PoS to PoS. This is exactly what Ethereum plans to do later in the year.
Recently, the EU’s Economic and Monetary Affairs committee voted against legislation that would have banned Proof-of-Work miners. These documents provide a unique insight into how far EU officials will go to combat mining-related energy consumption.
Although it seems that PoS cryptocurrency is safe from any sweeping regulatory action in near-term, Bitcoin mining in the EU will remain a contentious issue.
Eileen Wilson –Technology and Energy
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