The legal status of Bitcoin mining in the European Union depends on the results of the March 14 vote in the European Parliament Committee on Cryptocurrency Asset Markets (MiCA).
The controversial line about the “minimum environmental sustainability” of cryptocurrency mining has been reintroduced into the bill after it was previously deleted. The new line will require blockchain operators to submit a deployment plan detailing how they will meet environmental sustainability requirements. Failure to provide a plan may result in a ban on mining or trading coins in the EU.
While not specifically stated, the bill will directly impact Proof-of-Work (PoW) chains. PoW is a consensus algorithm used by the Bitcoin network, Ethereum, and some other cryptocurrency assets.
However, since Bitcoin (BTC) is decentralized, no deployment plan can be issued on its behalf. The absence of such a plan could jeopardize the existence of Bitcoin mining operations in the EU.
The EU accounts for about 12-14% of the global hash power on the Bitcoin network, with Germany and Ireland contributing most of this, according to last year’s data from the University of Cambridge and Statista.
Concerns about the energy consumption and carbon emissions of bitcoin mining are now at the forefront of the debate on how the EU should regulate this. However, these concerns begin to seem misplaced when we encounter raw data.
As of August 2021, the Bitcoin network required 90.86 Terawatt hours (TWh) of energy annually, according to a report from the Frankfurt School last November. This is about 0.05% of the total world consumption. The network accounts for only about 0.08% of total global carbon emissions, although these figures are very difficult to calculate accurately.
French MP Pierre Person warned that a ban on mining would drive talent and innovation out of the region. In a March 12 tweet, he said that by banning Bitcoin and Ethereum (ETH) and “making it harder to use NFTs and DeFi, the European Parliament is laying down our monetary and financial sovereignty.”
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If the bill is passed as is, Ethereum will not be active for long. The network is expected to complete a “merger” this year, making it a proof-of-stake (PoS) network that does not require physical mining rigs to reach network consensus. However, there could be more serious consequences for Bitcoin miners.
