EU warns it may shut Bitcoin mines to ease energy crisis

“The energy consumption of cryptocurrencies has increased by 900% in the last five years and has more or less doubled compared to two years ago, reaching around 0.4% of worldwide electricity consumption,” the European Union’s governing body, the European Commission, said on Tuesday. when it released its action plan on how to digitize the bloc’s energy system.

While the most ambitious component of the plan is to establish a region-wide data sharing initiative so that national power providers and governments can coordinate distribution, the most eye-catching aspect of the plan is its vision for cryptocurrencies.

“In the event that there is a need for load shedding in the electricity systems,” the EC said, referring to a scenario where utility operators cut off high-energy users to maintain supply, “member states must also be ready to stop crypto-mining.”

Bitcoin opponents have long pointed to the cryptocurrency’s high energy consumption as a mark against the digital currency’s practicality. The EU had previously proposed an outright ban on Proof-of-Work (PoW) cryptocurrencies such as Bitcoin, which derive their value in part from how much energy is burned to process them, but the bloc has softened this stance slightly.

Now the EU is proposing that the bloc develop an “energy efficiency label”.[s] for blockchains,” scales them based on how energy intensive each one is. Bitcoin is set to be at the bottom of the efficiency list, with EC blasting PoW as “relatively outdated.” The commission is much more for Proof-of-Stake mechanisms, like the model that Ethereum recently switched to, which are relatively energy efficient.

But Bitcoin bulls have consistently pushed against the narrative that Bitcoin mining is a waste of energy, often citing the statistic that global Bitcoin mining uses less electricity than all the dryers in the United States combined. The claim in the debate about the use of crypto energy is therefore whether mining Bitcoin provides as much benefit as consumer goods.

For decision makers, the answer is often no.

Even when Bitcoin mining runs on renewable power, political planners would rather save that energy for industrial or consumer purposes because renewable electricity is still a limited resource.

In southern China, for example, authorities shut down Bitcoin mines that feed off the lush region’s abundant hydropower, because the electricity was needed to power aluminum smelters and electronics factories.

In the EU, access to renewable energy will remain strained as the bloc transitions to a green energy grid, particularly as this transition is accelerated by the war in Ukraine. However, blockchain and cryptocurrencies will not necessarily be excluded from the transition entirely.

First, the EU plans to create a “blockchain-based energy trading” platform as part of the Energy Network Digitization Action Plan, proving that the Commission sees the value in the technology.

The requirement that “Member States must also be ready to stop the mining of crypto-assets” in the event of energy shortages could also be beneficial to crypto-miners. During a record heat wave this year, the Texas state energy operator paid Bitcoin miners to shut down operations to ease pressure on the strained grid.

Such “demand response agreements” are common between energy companies and larger corporate customers. But the EU, in its action plan, recommends that member states “put an end to tax breaks and other fiscal measures that currently benefit cryptominers.” That may or may not extend to paying miners to shut down during future energy crises.

And for Bitcoin utopians who see the cryptocurrency as a revolutionary tool for economic liberation, it’s worth noting that making Bitcoin mining more difficult in the EU doesn’t mean citizens still won’t have access to the token. It will only make it more difficult for a few players to make large profits from the machinery.

Eamon Barrett
– [email protected]
@eamonbarrett88

CARBON COPY

Debt for natural exchange

The Vulnerable 20 (V20), an organization of (confusingly) 58 economies at risk of destruction from climate change, called for an urgent restructuring of national debt on Sunday, in a communication released to coincide with the conclusion of an annual world bank meeting. The group, which relies on foreign loans to pay for climate adaptation, has a total of $435 billion in debt service payments due over the next five years. V20 wants to write off 30% of collective debt. Straits Times

The winds of change

European wind turbine manufacturers have laid off workers as rising production costs threaten the speed of industrial development. The industry group, the Global Wind Energy Council, has lowered its forecast for global wind installation volumes by around 5% this year, signaling virtually zero growth in capacity. But European producers are warning local authorities that the regional slowdown could create an opportunity for Chinese companies, which have benefited from low costs and consistent political planning, to steal market share. FT

Absorbs heat from the sea

Helsinki is developing a plan to extract heat from the bottom of the Baltic Sea by pumping the icy water through underground heat exchangers. The Finnish capital says the project could provide 40% of the city’s total heating needs, displacing coal and gas, which currently provide 75% of municipal heating. Helsinki has set a net-zero carbon emissions target for 2030, and the local power supplier, Helen, has already tapped into some unique sources of excess heat, such as waste heat generated by data centers and an ice rink. Bloomberg

Energy under stress

The World Meteorological Organization (WMO) warned in its latest annual report on climate change adaptation that global energy infrastructure is already “under stress” and at “significant” risk from climate change. According to the WMO, approximately 25% of the world’s current and planned hydroelectric dam projects are in areas of medium to high water stress. A third of thermal power plants are also in water-stressed areas. FT

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END NUMBER

2,361

Britain is embarking on an ambitious project to connect electricity from solar panels in the Sahara desert to a power station in Scotland, from where it can be distributed through the national grid. To connect the UK to solar energy fields in Morocco, project manager Xlinks – a start-up with no previous projects – plans to lay 2,361 miles of submarine cables, which are connected in 43-mile lengths each weighing over 1.4 megatons. If completed, the cable could supply 8% of the UK’s total energy needs.