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EU Parliament backs plan to phase out energy-hungry cryptocurrencies

The European Union Parliament introduced a de facto ban on Bitcoin and Ether today. The controversial proposal attempted to clean pollution from the least energy efficient cryptocurrencies. But even if the proposal fails, cryptocurrencies are likely to face scrutiny from policymakers as the EU tries to tackle dual climate and energy crises. Eliminating pollution has become a global game since China Cryptocurrencies were banned last year.

EU Parliamentary Committee on Economic and Monetary Affairs voted in Monday to continue with a legislature framework to regulate digital assets. In the process, they decided to drop a proposed rule in the framework that would ban people in the EU from using an energy-intensive process to create cryptocurrencies including Bitcoin.

Cryptocurrencies like Bitcoin and Ether have raised alarms about how much electricity they require – and how much The result is emissions of the planet-warming greenhouse gases they produce. The European Union is grappling with an energy crisis that has sent electricity prices skyrocketing over the past year and is made even more complicated as the bloc tries to weaning supplies from Russia.

Bitcoin network uses more electricity in a year than Norway and will rank 27th in the world in terms of annual electricity use if it were a country. Most of that electricity is used in an intentionally inefficient process of using energy to verify transactions called “proof of work.” To earn new tokens and verify transactions, Bitcoin miners use special computers to solve complex puzzles. Those puzzles, increasingly difficult to solve, have essentially injected inefficient energy into the blockchain.

Since puzzle solving burns a lot of energy, that’s something the EU parliament has considered banning. According to CoinDesk. That sparked anger from the crypto industry, who saw it as a killer blow to Bitcoin. The proof-of-work targeting rule was finally dropped from the framework today, a congressional press official confirmed with The Verge in an email. Instead, it asks the European Commission to look separately at the environmental impact of cryptocurrency mining as it works. define what can be classified as “sustainable” investment.

The cryptocurrency industry has been trying to solve its environmental problems for a long time. For years, the Ethereum network has been planning – and delaying – the transition from proof of work to another process known as proof of stake that helps solve the puzzle. Proof of stake uses less energy and is considered more environmentally friendly. Such a move would also solve the energy efficiency problem for Bitcoin. But no one really expected Bitcoin to follow suit, as all miners on the network would need to agree to take a loss from dumping the hardware they had invested in to mine Bitcoin. Some proof-of-work advocates also argue that it is the most secure mechanism for maintaining blockchain integrity. With no buy-in from miners, any ban on proof of work is essentially a ban on Bitcoin.

However, banning cryptocurrencies has not proven to be an effective way to cut their greenhouse gas emissions. China used to be home to the majority of cryptocurrency miners, until kick them all out last year. Since then, Bitcoin heated the planet pollution may have developed, according to research published last month. Miners who once had access to abundant hydroelectricity in China have replaced it with more gas and coal in the US and Kazakhstan, the newest Bitcoin mining hubs in the world.

So far, there are not many energy-intensive cryptocurrency mining operations in the EU. Ireland and Germany have the most, with only less than five percent each Bitcoin mining market share in the world, according to Cambridge Alternative Finance Center. Those numbers “can be significantly inflated,” says Cambridge, because of VPNs.

EU is racing to transform power grids to meet climate and security goals as well as energy-hungry blockchains can make completion more difficult. EU set up a Target last year when cutting greenhouse gas emissions by more than half by the end of the decade. Russia’s invasion of Ukraine makes the transition to clean energy all the more urgent, as Russia supplies the EU Almost half its gas imports. New measures launched by the European Union last week will significantly cut its dependence on Russian gas in the coming years – a plan that relies heavily on improving energy efficiency.

The legislative framework voted on by the EU Parliament today has not yet been established. This will be followed by “syllogism” negotiations, where the EU parliament, commission and council will have to come to an agreement before the proposal can become law. Only one chance According to Patrick Hansen, head of strategy and business development at blockchain startup Unstoppable Finance, a ban could in fact be put in place again during those negotiations.

Members of the European Parliament today also asked the European Commission to consider where cryptocurrencies run on proof of work. as it grows tutorial for sustainable investment. Had Heated debate in the process consider whether certain nuclear and gas-fired power plants should be classified as sustainable. Now, it looks like the climate controversy over Bitcoin could heat things up again.

https://www.theverge.com/2022/3/14/22977132/bitcoin-european-union-parliament-ban-proof-of-work-cryptocurrencies EU Parliament backs plan to phase out energy-hungry cryptocurrencies

Fry Electronics Team

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