Full Bitcoin mining ban in Europe? The ECB thinks it is likely
Venture Advisor for Presight Capital Patrick Hansen divided the results of three new research articles on Bitcoin and crypto’s climate risk, decentralized economy (DeFi) and stack coins. The articles are published by the European Central Bank (ECB), and highlight the approach taken by the financial institution regarding the incipient asset class.
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ECB research compared Bitcoin mining with someone driving a fossil car. In that sense, the public authorities claimed to have the ability to stimulate it, impose a carbon tax on it or ban it. Research claims the latter is very likely.
As shown below, the research claims that Bitcoin mining uses more energy than the Netherlands, Spain, Austria and other massive energy sources. BTC mining consumption, as presented by the ECB, has increased electricity consumption over the years.
In 2022, the Bitcoin Mining Council (BMC) published a report on this blockchain’s energy consumption. Contrary to the report published by the ECB, this organization claims that the Bitcoin mining industry is one of the most sustainable in the world with the rapid introduction of clean energy.
As shown below, members of those who accounted for over 50% of the Bitcoin hashrate have a sustainable power mix that is larger than most countries in the world. In total, BTC mining uses less than 0.1% of global energy at 247 terawatt per hour (TWh).
Hansen claims, however, that the EU will take action against what it considers to be the “fossil fuel” -blocked blockchain and its mining industry. According to the report:
It is highly unlikely that the EU authorities will restrict / ban fossil cars by 2035, but refrain from implementing measures for assets whose current annual carbon emissions are sufficient to offset most (..) countries’ emissions savings and (..) global net savings from (..) ..) electric vehicles.
How the European Central Bank plans to regulate Bitcoin
The European Union and its central banks are preparing to introduce a new regulation for Bitcoin and cryptocurrencies. The financial institution wants to regulate the incipient asset class “in depth” with the implementation of two regulatory packages called Regulation on Markets in Crypto Assets (MiCA).
The first version of this package will take effect as soon as 2024. The second version is still under development, but may include a mechanism to regulate Bitcoin and the devices that maintain the blockchain, DeFi and other cryptocurrencies. ECB President Christine Lagarde said:
MiCA 2 will fully cover decentralized finance (DeFi), which currently focuses on financial intermediaries. Where there is no intermediary, the regulation does not apply, and that is the case for Bitcoin. So Bitcoin will not be covered by MiCA 1, but hopefully for MiCA 2 you will take that into account.
Lagarde, other members of the ECB, and members of international regulators, politicians and financial institutions converged on one point: Bitcoin and cryptocurrencies become a risk to the financial system and consumers.
Related reading | Investor sentiment is falling as the crypto market loses $ 50 billion
However, some experts believe that MiCA 2 goes one step too far in regulating the incipient asset class. The first iteration of this package offers a framework and can provide crypto companies with clear rules. The other can simply pursue control of the underlying assets.
Skje a spoonful of your daily nightmare fuel…
… ECB President Christine Lagarde urges the EU to adopt a “MiCA 2” that directly regulates Bitcoin and other decentralized technologies (instead of just regulating intermediaries between cryptocurrencies (as “MiCA 1” does))…
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– _gabrielShapir0 (@lex_node) June 21, 2022
