The European Central Bank (ECB) described cryptocurrency mining as a significant climate change risk in its July research bulletin. PoW Blockchains such as BTC, ETH and DOGE will be in danger in case of a possible restriction.
ECB hints that it will ban cryptocurrency mining by 2025
As expected, the report specifically mentions Bitcoin. However, issues with Ethereum came up despite its transition to the PoS mechanism. Researchers compiled estimated carbon footprint data on PoW Blockchains. They also discussed the obstacle they cause to the EU’s fight against climate change. These topics included various policies with a 2025 deadline for “potential measures”.
Bitcoin, Ethereum and DOGE identified as environmentally harmful
The researchers use data from a variety of sources, including the Cambridge Bitcoin Electricity Consumption Index (CBECI). Accordingly, it turns out that Bitcoin and Ethereum mining activity uses more energy than individual “mid-sized countries” such as Spain, the Netherlands, and Austria.
The data also spoke of the excess of estimated annual emissions as of May 2022. Targeted greenhouse gas (GHG) emissions savings for many European countries have been exceeded by mining. The report acknowledged industry initiatives such as Ethereum’s transition to PoS and the Bitcoin Mining Council’s efforts to “decarbonize” and educate the sustainable mix of energy sources used in BTC mining.
However, the researchers will continue with the analyzes due to unclear methodology, lack of detail, and unreliable data.
Cryptocurrency mining ban coming?
The report talked about various scenarios resulting from a possible restriction on PoW mining. For example, Bitcoin and Ethereum have large institutional deposits. Given this, the researchers say the financial sector is exposed to “transition risk.” That is, the EU’s “green transition” prices will in turn affect institutions investing in these tokens. The following Proof of Work Blockchains will be at stake in a possible restriction decision in the future.
Also, recent initiatives by the Swedish Environmental Protection Agency refer to the PoW mining ban. The researchers also said that certain cryptocurrencies are not compatible with ESG targets. MiCA has not banned PoW mining, as we have reported as Kriptokoin.com. It has also been praised for providing a much-needed framework for cryptocurrencies. However, it has set some heavy requirements for stablecoins, which should be limited to a maximum daily trading volume of 200 million euros.
Bitcoin and Ethereum are PoW Blockchains that hold more than 50% of the market’s total value. Previously, Tesla suspended Bitcoin transactions due to the environmental damage caused by mining. In case of a possible restriction, countries that will implement it will prevent mining facilities from operating.
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