Proof of Work Cryptocurrencies Survive EU Proposal

The looming ban on proof-of-work cryptocurrencies within the EU has been stopped in its tracks.

The European parliaments economic and monetary affairs committee voted on Monday to keep the provision out of a draft of the proposed Markets in Crypto Assets (MiCA) substructure, the EU’s complete regulatory infrastructure for governing digital assets.

The provision added to the bill last week sought to limit the use of cryptocurrencies, mined by the energy-intensive method called proof-of-work, throughout the 27 member states of the EU.

The proposal would have required all cryptocurrencies to follow the EU's “minimum environmental sustainability standards with respect to their consensus mechanism.”

For the already established proof-of-work cryptocurrencies, being traded within the EU, like Bitcoin and Ethereum, a planned phase-out would be scheduled, where the consensus mechanism of the crypto was moving from proof of work to other less energy-consuming mechanisms, like proof of stake.

The plans for Ethereum to move to proof-of-stake have been in the works for a long while now, with the release scheduled to go into effect sometime later this year. Due to Bitcoin’s infrastructure, the same can not be said for this legacy coin.

A small minority of the committee voted in favor of a compromise, that called up the executive arm responsible for proposing new legislation, the European Commission, to offer a different set of regulations.

Proof-of-work blockchains have been under fire ever since crypto made its way onto the platform of public consciousness. Most cite the environmental impact made by the act of mining the crypto as the reason for their hesitance.

Some leaders within the EU even claim they are worried that the renewable energy generated by some countries will be shepherded toward sustaining cryptos like Bitcoin instead of for national use.

With recent events leading to a hike in oil prices, sustainability has been on the mind of many with there being no one great solution, anything that can be considered ‘unnecessary excess of energy’ will be scrutinized (such as crypto). The environmental argument against Bitcoin has many valid points, but I ask what is the price for fiscal liberty, and who is qualified enough to say for certain that this innovative technology really is causing any long-term harm.