After rejecting a proposal to ban crypto mining, the EU is looking at disclosure and mitigation measures to make crypto assets more sustainable in the coming years.
The European Union (EU) released a package of documents Oct. 18 relating to an action plan for implementing the European Green Deal and the REPowerEU Plan, both of which are aimed at energy savings by digitalizing the energy sector. The European energy planners have cryptocurrency in their sights along with myriad other energy users.
The REPowerEU Plan was announced in May as a response to the Russian invasion of Ukraine, which has had a profound impact on European energy supplies. The Russian crisis was an opportunity for “fast forwarding the clean transition,” the European Commission said. “Controlling the energy consumption of the ICT sector” is a major part of the plan and includes blockchains among the objects of its attention as a subset of data centers.
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 siren calls for inertia. pic.twitter.com/Z71niRzX8H— Social Europe (@socialeurope) October 17, 2022
The “Commission Staff Working Document” notes that Europe accounts for about 10% of world crypto mining, with Germany and Ireland leading the continent and Sweden experiencing a large uptick in activity after mining was banned in China. The document foresees the European Securities and Markets Authority drafting technical standards for the crypto mining industry.
The authors of the document cited an undated document written by the European Blockchain Observatory and Forum (EUBOF) think tank, which included “potential policy options that could be warranted to mitigate adverse impacts on the climate of technologies used in the crypto-asset market.” That document will be critical to a report to come in 2025 on the environmental impact of crypto assets. If steps are taken on EUBOF recommendations, they noted:
“This would be a first attempt worldwide to decrease the attractiveness of bitcoin investments and curb the price of bitcoin.”
The paper also stated that investors need better information about the energy use of cryptocurrencies and, echoing the EUBOF document, that the EU should take the lead in creating international blockchain label standards.
Related: Researchers allege Bitcoin’s climate impact closer to ‘digital crude’ than gold
The “Communication from the Commission to the European Parliament, the Council, the European Economic and Social Committee and the Committee of the Regions” said energy use for crypto mining has doubled in the last two years. It noted that proposed Markets in Crypto Assets (MiCA) legislation would require crypto-asset market actors to make environmental disclosures.
In the meantime, due to the tight energy situation this winter due to upheavals in Russian energy supplies, the European Commission, the executive branch of the EU, is urging member states “to implement targeted and proportionate measures to lower the electricity consumption of crypto-asset miners [… and] also in a longer term perspective, to put an end to tax breaks and other fiscal measures benefitting crypto-miners.” Norway is already considering eliminating crypto miners’ tax breaks.
Speaking in Washington recently, Commissioner for Financial Stability, Financial Services and the Capital Markets Union Mairead McGuinness said that Europe placed high importance on the energy and environmental issues connected with crypto. The United States’ Biden administration has also looked at crypto’s environmental impact.
