The European Securities and Markets Authority has called for a prohibition on proof-of-work crypto mining
Regulators in Europe are concerned about crypto’s potential impact on climate change goals.
Erik Thedéen, the European Securities and Markets Authority’s vice-chair, has expressed concern about the increasing use of renewable energy for Bitcoin mining.
Thedéen recently told the Financial Times that Bitcoin (BTC) mining has become a “national issue” and that cryptocurrencies may jeopardise climate change goals.
He urged European regulators to take a stand against proof-of-work mining, which is primarily used by Bitcoin and a handful of forked altcoins. Additionally, he promoted proof-of-stake as a more energy-efficient alternative:
“We need to have a discussion about modernising the industry’s technology.” Melanion Capital, a Paris-based alternative investment firm, addressed the growing call for a prohibition of PoW mining in November 2021, describing it as “completely misinformed.”
According to the investment firm, because Bitcoin is decentralised, there is no lobby or group to defend its interests, which “should not be used as an opportunity to enact measures criminalising an industry for its lack of defensive powers.”
The energy consumption of the Bitcoin network was one of the most contentious issues in 2021, with Elon Musk, Jack Dorsey, and Michael Saylor engaging in multiple debates. Tesla even discontinued the Bitcoin payment option, citing the energy consumption of the Bitcoin network. Unlike Thedéen, however, the majority of critics have previously expressed no reservations about the use of clean energy. Musk previously stated that if 50% of the energy used by the Bitcoin network came from renewable sources, Tesla would reconsider adding a Bitcoin payment option.
China’s May 2017 ban on Bitcoin mining proved to be a boon for the ecosystem, as it not only dismantled the highly centralised Bitcoin mining industry, but also facilitated the transition to renewable energy usage. According to the Bitcoin Mining Council’s Q3 report, the Bitcoin network’s renewable energy consumption will reach 58 percent by the third quarter of 2021.