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Europe wants to ban PoW-based cryptocurrencies and the industry mobilizes

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MEP Stefan Berger assures that the European vote that proposes to ban the use of bitcoin and other PoW-based cryptocurrencies will not take place on the 28th. Berger considers it essential that the MiCA report is not misunderstood as a de facto ban against cryptocurrencies based on PoW. in proof of work (PoW). The prohibition of this type of cryptocurrency arises in a context related to the decrease in energy consumption and carbon emissions in the region. Berger said a few days ago that approval of the proposal was “very likely.” It should be remembered that Europe is the largest crypto economy in the world.

Europe, ban cryptocurrency PoW

 

The European proposal to ban cryptocurrencies based on  proof of work (PoW) transcends as a result of several publications that report on the matter. Europe was scheduled to discuss the proposal as a new amendment added to the Crypto Assets Markets Act (MiCA) on February 28. Not surprisingly, the move set off alarm bells throughout the crypto industry. Brian Brooks, former comptroller of the United States Office of the Comptroller of the Currency, and Patrick Hansen of Unstoppable Finance have publicly expressed their concern. Both underline the negative effects that the approval of this amendment could have for technological development and innovation.

For his part, Berger says in a Twitter thread that it is urgent to resume talks and negotiations with parliamentary groups on the matter. The politician is sure that he will try to get a commitment from all interested parties, to provide cryptoactives with an adequate legal framework. A framework, he says, that does not challenge the use of proof-of-work (PoW)-based crypto currencies

 

 

 

With the support of Spain

The news of banning proof-of-work cryptocurrencies in the European Union was reported by CoinDesk, a media outlet owned by the Digital Currency Group. The newspaper, which had access to the draft of the regulatory amendment, assures that said amendment has the support of legislators from Spain, Germany and Norway.

Such a ban will undermine technological development and innovation in Europe, said Patrick Hansen, director of growth at Unstoppable Finance and a RegTrax contributor. In a series of messages on Twitter, Hansen said that the stakes are high if the European Commission decides to approve the proposal put forward by Parliament.

 

Energy consumption and carbon emissions

 

Since last November, the European Securities and Markets Authority (ESMA) and the Swedish Financial Supervisory Authority have been pushing to ban PoW cryptocurrencies. Both organizations point to the need to reduce carbon emissions to comply with the Paris Agreement on climate change. However, despite the pressure, Hansen said that no one expected the ban to become a decisive factor. Much less, that an amendment was included in the final report of the MiCA law.

 

The crypto industry is currently going through a kind of “deja vu” . Discussions by European lawmakers to ban proof-of-work are reminiscent of last year’s fight in the United States. When the effects of the Infrastructure Act and the amendment presented by US Senators Rob Portman, Mark Warner and Krysten Sinema were discussed. Which chose between “winners and losers”, by favoring miners over cryptocurrency validators. In the case of Europe, the situation is the opposite, as the proposal favors validators over miners. Prohibiting the latter, if approved.

A serious threat

 

Brooks, current CEO of Bitfury Group and former Chief Legal Officer of Coinbase, called on the community to take the new European threat seriously. Brooks called on bitcoiners and the crypto community to mobilize and show their feelings against the prohibitive measures that the EC could take.

 

According to Hansen, if the amendment passes, by 2025 cryptocurrency companies in the European Union would be prohibited from offering services with PoW crypto assets. Among them, Bitcoin, Ethereum, Dogecoin, Litecoin, Bitcoin Cash, Monero, Kadena, Zcash, Grin and Ethereum Classic, just to mention the main ones.

 

Favor instead of prohibit

 

Hansen believes that Europe should adopt and regulate cryptocurrencies instead of banning them and favoring only proof of stake. The path of Web 3 is the opportunity for the continent to be competitive and move towards digital sovereignty, Hansen said in November.

 

Other bitcoiners have also spoken out against the EC’s regulatory plans. User @crypt0e said that proof of work is the only way to separate money and state. He recalls that Bitcoin was invented to escape current financial systems, similar to proof of stake. Where the largest asset owners can unduly influence the rules of the game. “Thanks to PoW full nodes, neither miners nor major BTC users can change the protocol,” he said.

 

Environmental impact of BTC mining

 

Global regulators have been curbing cryptocurrency mining as an activity that harms the environment. The energy consumption demanded by blockchain networks such as Bitcoin and Ethereum today is comparable to 100 million flights between Sweden and Thailand, Swedish regulators said in November.

In Russia, although the government supports this activity to gain a competitive advantage over other nations, the Central Bank wants to ban it. The entity considers that the energy consumption of cryptocurrencies compromises its environmental objectives. Also, in Kazakhstan, one of the countries with the highest concentration of Bitcoin hash rate, the Government is surrounding 13 unauthorized miners, for using too much energy. Nearly 200 MW, according to a statement recently published by the government.

In the United States, current leader in BTC mining, regulators have begun to analyze the environmental impact of this lucrative activity.

 

Image taken from Twitter and Pixabay

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