Once again, the pressure is back on the cryptocurrency market following reports that the European Union Parliament is working on outlawing Proof-of-Work cryptos due to environmental concerns.
The move by the EU means that Bitcoin could be potentially banned!
Following the news, the price of BTC is down by 1.5% and currently trading at $38,577 with a market capitalization of $730 billion. For comparison, other PoWs like ETH are also trading at the negative zone. But the correction appears to be more profound for altcoins.
The European Union Parliament would converge to vote on adopting the Market in Crypto Assets (MiCA) framework. The draft legislation of MiCA comes with a clause that proposes a ban on all energy-demanding virtual assets.
Coincidentally, the latest turn of events comes when the United Kingdom proposes a blanket ban on all BTC ATMs throughout the UK.
According to the provisions of MiCA, all digital assets are subjected to the European Union’s minimum environmental sustainability threshold concerning the consensus mechanism adopted for validating transactions. As such, all criteria need to be met before any digital asset can carry out any activity in the EU.
Is Compromise A Possibility?
There is no certainty here as to what the decision-makers in the EU have been deliberating on. But an EU parliamentarian, Stefan Berger, who knows the MiCA framework, has a contrary opinion.
According to Berger, the Greens and Socialists are the vocal critics of the Proof-of-Work and the energy demand of the PoW, saying that Bitcoin as a digital asset requires more energy than the Netherlands as a country.
All indications point to the energy demands of Bitcoin as always being the central theme of any argument about the environmental impact of PoW. Last year, China outlawed cryptocurrency mining for the same reason – it is energy-intensive.
Likewise, even the Tesla CEO, Elon Musk, has raised pertinent questions over Bitcoin mining and its energy consumption, hence his refusal to adopt BTC as a means of payment in Tesla.
However, the crypto industry has been shifting toward adopting renewable energy for some time now. Renewable energy sources have powered Bitcoin mining since the middle of last year.
Some critics of the EU’s move to ban Bitcoin noted that the European Union has more pressing problems to focus on if it is serious about carbon emissions. According to them, many industries need to be banned before talking about banning Bitcoin and other PoW.
It remains to be seen how far the EU can go with the ban because the MiCA has been one of the most widely talked about topics for quite some time. Not all member countries are opposed to the use of crypto and its related services, but it seems that the ones against the use of Bitcoin far outweigh those in support.
That said, the final decision to ban or not to ban the use of Bitcoin and PoW depends on the outcome of the votes by member countries.