Europe to launch energy efficiency labels for blockchains

The European Union is to develop an energy efficiency label for blockchains.

The European Commission has introduced these measures as part of wider plans to control energy consumption in the ICT sector, including an ecolabel scheme for data centres, an energy label for computers and measures to clarify how much energy telecoms services use.

“The goal is to make our energy system more efficient and ready for an increasing share of renewable energy sources,” so energy commissioner Kadri Simson. “For this we need more innovative digital solutions and a network that is much smarter and more interactive than it is today.”

It will provide financial support for research into digital technologies in the energy sector through various public sector-led programmes.

It did not specifically mention whether any of this support would make its way to the crypto sector.

Up until now, the EU could be said to have taken a rather lenient stance on cryptomining, at least compared to regions such as China which has issued an outright ban.

In March 2022, the European Parliament’s Economic and Monetary Affairs Committee rejected attempts to ban it proof of work (PoW) crypto mining in the region, removing the offending relevant section of the Markets in Crypto Assets (MiCA) bill before it was voted on.

But this is also not the first environmentally focused piece of crypto legislation that the EU will put into effect.

Markets in Crypto Asset Regulation (MiCA), set to enter into force at the end of 2023, will force certain market players to provide disclosures about their environmental and climate footprint.

Regulators are circling cryptomining

It’s not just EU regulators who are keeping a close eye on cryptomining, it’s an issue that’s attracting a lot of attention on the other side of the Atlantic.

Massachusetts Senator Elizabeth Warren and a group of six other US lawmakers spoke one letter to U.S. Senator Pablo Vegas, executive director of the Electric Reliability Council of Texas (ERCOT), highlighting concerns about cryptomining in Texas and “the impact these operations could have on climate change, the stability of the energy grid and subsidies — ultimately paid for by retail consumers.”

The difference between the energy output of PoW versus proof of effort (PoS) consensus mechanisms can be huge.

Post-Ethereum’s transition to a PoS-based system, it is now reportedly consuming 99.99% less energy than it did in the past, at least according to research from the Crypto Carbon Rating Institute (CCRI), controlled by blockchain firm ConsenSys.