EU Revises Legislation Targeting Proof-of-Work Crypto Mining
MiCA regulations no longer contain language targeting ecologically-demanding cryptocurrencies.
Key Takeaways
- A European law that proposes restrictions on environmentally unsustainable consensus mechanisms has been revised.
- That law could have conceivably restricted the use of Bitcoin and other mining-based cryptocurrencies prior to revision.
- Stefan Berger, a member of the European Parliament, confirmed that the relevant text has been removed.
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A piece of European regulation has been revised to remove language that proposed a ban on mining-based cryptocurrencies.
MiCA Regulations Targeted Crypto Mining
Language in a piece of legislation that was interpreted as problematic for Bitcoin and other Proof-of-Work cryptocurrencies has been removed.
The law in question is Markets in Crypto-Assets (MiCA), which proposes regulations around the use of cryptocurrencies. The law was first proposed by the European Commission in September 2020.
The initial version of the law said that, beginning in 2025, cryptocurrencies created and admitted in the EU should “not be based or rely on environmentally unsustainable consensus mechanisms.” It also says that those mechanisms should “comply with minimum environmental sustainability standards.”
That language would seemingly impose a Europe-wide ban on cryptocurrencies that rely on Proof-of-Work or mining, a practice that is noted for its high energy demands.
Bitcoin, which uses over 170 terawatt-hours (TW/h) of energy per year, would presumably fall under that rule.
Other mining-based blockchains and cryptocurrencies—including Ethereum, Dogecoin, Litecoin, and Bitcoin Cash—would presumably fall under the same rule as well,although those cryptocurrencies use considerably less energy than Bitcoin itself.
Restrictive Rule Has Been Revised
Now, the rule restricting ecologically intensive cryptocurrency mechanisms has now been removed from the law, according to German-language crypto news site BTC Echo.
Stefan Berger, a member of the European Parliament, confirmed the revision:
“The paragraph is no longer in the text. The report has yet to be voted on in committee. In this vote, we will then see where the majorities lie. The decision has not yet been made.”
Berger also told The Block that the next vote is set to take place between mid-March and early April. If approved, the law will face further voting and debates before it takes effect.
Despite the law’s apparent goal of restricting cryptocurrency use in the EU, it is unclear whether it will actually be able to accomplish that goal. Most cryptocurrencies are designed to be transferred between peer wallets, meaning that governments can at best restrict exchanges, custodial wallets, and other centralized services.
Disclosure: At the time of writing, the author of this piece owned BTC, ETH, and other cryptocurrencies.
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