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Mining

EU votes against a de-facto ban on Bitcoin’s POW consensus method in MiCA draft

Symbiosis

The ECON committee of the European Union voted against a de-facto ban on cryptocurrencies that rely on the proof of labor consensus protocol, like Bitcoin, that was included in the most recent draft of the MiCA, or Markets in Crypto-assets Regulation, report.

A majority of 32 parliamentarians voted against the ban and selected to assist an alternate modification — to convey cryptoassets beneath sustainability-related taxonomy like different monetary merchandise — submitted by MEP Stefan Berger, who’s serving because the Rapporteur on the report. The modification primarily removes the judgment and addressing of POW from the MiCa regulation.

Meanwhile, 24 parliamentarians voted in favor of the ban, beneath which the EU might primarily block exchanges from itemizing, in addition to corporations from offering providers in, cryptocurrencies that don’t meet its “environmental sustainability criteria.”

Why is such a ban included?

bitcoin, mining, energy, consumption, 2022
Energy Consumption of Bitcoin (2018 – 2022)

Proof of work-based cryptocurrencies requires mining to validate transactions on the chain. Mining is basically a complicated drawback that may solely be solved utilizing a huge quantity of computing energy, which in flip wants huge quantities of real-world power to perform. In Bitcoin’s case, these issues get more durable and more durable to unravel over time and require extra energy, particularly with greater ranges of adoption.

Some parliamentarians imagine that is negatively affecting the bloc’s progress towards assembly its local weather targets. Bitcoin mining’s international carbon emissions have been rising at a regular price since its inception and are actually equal to these of the Czech Republic, with a international carbon footprint of 0.19%.

Next Steps

The ECON committee’s vote on the report is just step one towards formally implementing crypto-related regulation.

“The EU Parliament has paved the way for innovation-friendly crypto regulation that can set standards worldwide. The process is not over yet; Steps still lie ahead of us.”

Berger mentioned in a tweet after voting was concluded. He elaborated that the committee’s approval of the ultimate draft means it may possibly now proceed to interinstitutional negotiations, which contain a “trilogue” between the Parliament, the European Council, and the European Commission.

Regulation can solely come into power if it efficiently passes by way of the trilogue. Additionally, MEPs who’re in favor of the ban nonetheless have an choice to veto the report and produce it again to the plenary of the Parliament.

If the report is taken again to the plenary it can possible trigger extra delays in regulating the European crypto trade. Additionally, even when the report passes by way of to the trilogue stage it’s nonetheless unsure how the union will finally regulate mining and proof of labor.

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