Europe moves toward regulatory action on crypto’s environmental impact, energy use

Europe moves toward regulatory action on crypto’s environmental impact, energy use

On Oct. 18, the European Union (EU), released a set of documents related to implementing the European Green Deal, and the REPowerEU Plan. Both of these plans aim to digitalize the energy sector in order for energy savings. European energy planners are targeting crypto miners and other energy users.

As a result of the Russian invasion in Ukraine, which had a significant impact on European energy supplies, the REPowerEU Plan was launched in May. According to the European Commission, the Russian crisis provided an opportunity for “fast-forwarding the clean transformation.” The plan includes a large part on “controlling the energy consumption in the ICT sector”, which also includes blockchains as a subset.

Green Deal: the light at the end of the crisis tunnel https://t.co/CAd5uorW9y The faster we deploy the European Green Deal, the quicker we become crisis-proof. Brussels must resist the temptation to inertia. pic.twitter.com/Z71niRzX8H
— Social Europe (@socialeurope) October 17, 2022

The “Commission Staff Working Document”, which notes that Europe accounts approximately 10% of global crypto mining, with Germany and Ireland leading the way and Sweden seeing a significant uptake in activity following the ban on mining in China. This document outlines the European Securities and Markets Authority as drafting technical standards to support the crypto mining industry.

The document’s authors cited an undated document from the European Blockchain Observatory and Forum. This document contained “potential policy options” that could be justified to reduce adverse effects on the climate of technology used in crypto-asset markets. It will be crucial to the 2025 report on the environmental impacts of crypto assets. They noted that if EUBOF recommendations are implemented, it will be:

“This would be the first global attempt to reduce the attraction of bitcoin investments and lower the price of bitcoin.”

It was also noted that investors require better information on the energy consumption of cryptocurrency. The EUBOF document said that the EU should lead the creation of international standards for blockchain labels.

Related: Researchers claim that Bitcoin’s climate impacts are closer to digital crude than gold.

“Communication of the Commission to the European Parliament and the Council to the European Economic and Social Committee and the Committee of the Regions” stated that energy consumption for crypto mining has increased by two-fold in the past two years. It was noted that the Markets in Crypto Assets legislation (MiCA), would require crypto-asset market players to make environmental disclosures.

The European Commission, the executive branch, has asked member states to take targeted and proportionate steps to reduce the electricity consumption of crypto-asset miner . It also urges them to look longer-term and to end tax breaks and other fiscal benefits for crypto-miners.

Mairead McGuinness, Commissioner for Financial Stability, Financial Services, and the Capital Markets Union, stated that Europe places a high value on energy and environmental issues related to crypto. The environmental impact of crypto has been a focus of the United States President Joe Biden’s administration.

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