BTC Struggles to Find Friendly Policies in the EU
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Over the weekend, a last-minute addition to the Markets in Crypto Assets (MiCA) bill reintroduced the ban on proof-of-work (PoW) coins in the EU. After rallying support within the Committee on Economic and Monetary Affairs (ECON) of Parliament, the amendment was struck down in a vote of 34 against and 24 in favor. Had the revision to the most recent draft been approved and the bill subsequently ratified, a ban on PoW coins, most notably BTC, would have taken effect in all 27 member states of the EU.
The motivation to ban PoW coins is tied to the massive amounts of energy required to support the network. Members of the European Parliament (MEPs) are concerned that BTC is an unsustainable practice with dire environmental impacts. In order to remove the outright ban, MEP Stefan Berger recommended cryptocurrency instead be added to the EU taxonomy as a compromise.
After having cleared this first hurdle, PoW cryptocurrencies have yet another obstacle with the EU taxonomy. This classification system defines which economic practices are environmentally sustainable, giving member states and businesses a directive of where to invest.
The underlying assumption here is that future EU legislation will focus more intently on greener initiatives and the costs associated with practices that are unsustainable will rise. Should cryptocurrencies be added to the taxonomy list it will most likely be labeled as an unsustainable economic activity. This would impact the ability of miners to operate in the EU. The means through which they could secure funding would be limited as, moving forward, most states and businesses will be incentivized to back sustainable practices.
Some of the biggest debates in countries around the world over PoW coins focus on their inefficient energy usage. With this obstacle comes an opportunity to explore more efficient ways to power mining rigs. Harnessing renewable energy is one step closer, but the industry needs a more pragmatic remedy for its energy requirements. This is not the first time crypto has hit this roadblock, but there is a lot more at stake for the future of crypto in Europe and, by default, the Western developed world.