European Regulator Wants To Ban Proof Of Work Crypto Mining

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One of the top regulators in the European Union has a new proposal to cut cryptocurrency carbon footprint: disallow proof-of-work mining. The proposed ban, suggested by the vice-president of the European Securities and Markets Authority Erik Thedéen during a Financial Times interview, would apply to EU countries and come in tandem with a pivot to a less energy-intensive “proof-of-stake” mining method.

Thedean said bitcoins—and cryptocurrencies in general-could jeopardize the EU’s chances of meeting its climate target of reducing carbon pollution by at least 55% by the end of this decade. Bitcoin and Ether, the two largest cryptocurrencies in the world, are both based on pmining work roof. The process is incredibly energy-intensive, pitting computers around the world against each other in a race to solve a complex calculation. The first one who makes a new block while the others waste energy and emit tons of carbon-for nothing.

A University of Cambridge report published last year estimated that bitcoin mining around the world consumes more electricity per year than all of Argentina. Anot To analyse by Digiconomist, meanwhile, estimates that bitcoin mining alone generates about 97 million tons of carbon per year, roughly the carbon footprint of Kuwait.

Some miners and marketplaces that use proof-of-work coins, especially in the NFT space, have turned to carbon offsets. But it’s a false solution it does not address the deeper question of simply reducing emissions. Proof of Stake does exactly that, however. This system allow cryptocurrency owners to stake their cryptocurrency as a guarantee to become validators. These validators create new blocks on a network and organize transactions. Because only one validator creates blocks at a time for proof of stake, the the technique uses a tiny fraction of the energy of proof-of-work mining and results in reduced carbon emissions.

“The financial sector and many large institutions are now active in the cryptocurrency markets,” Thedéen told the Financial Times. “We need to have a discussion about moving the industry to more efficient technology.”

Countries around the world have already started imposing restrictions on cryptocurrency mining or banning the practice altogether. Chinese regulators posted a cover to forbid in all cryptocurrency mining and transactions Last year. Before the repression, 75% of cryptocurrency mining happened in China. Counties that include Bangladesh, Algeria, and Egypt all imposed similar mining restrictions. Just this month, Kosovo has become the newest country to announce this would prohibit cryptocurrency mining. An EU ban would further limit where children are exploited, although there are still plenty of places ready to welcome them with open arms. This includes US states (look at you texas) and cities (cough, cough Miami) as well as others countries like El Salvador.

Jhe EU makes a relatively small share of mining proof of work compared to other countries such as the United States, Germany, France, Switzerland and Italy, for example, together account for less than 5% of global bitcoin mining, according to the Cambridge Center for Alternative Finance. The United States, on the other hand, has a share of 35.4%. At least for now, these numbers suggest that the EU would have less to lose by banning proof of works than other nation states.

While there are a number of laser-eyed congressmen and states that want crypto to keep rolling, youhe regulates the landscape could change just a little bit in the USA. The House Energy Committee is to hold a audience this week, titled “Cryptocurrency Cleanup,” focusing on the climate toll of cryptocurrencies. While the country – and the EU, for that matter – are far from banning proof of work, it is a sign that some regulators are at least starting to take it seriously the climate dangers posed by certain crypto-currencies.

Maria D. Ervin