EU Parliament Votes Down Anti-PoW Bill

Members of the European Union parliament recently voted down a drafted bill that, if enforced, would affect miners of several digital assets. Bitcoin and Ethereum could be the biggest coins susceptible to the law.

Legislation Poses Existential Threat to Virtual Assets

Dubbed MiCA, the proposal in question featured a ban on protocols that make use of the proof-of-work consensus mechanism. The MiCA came to media attention last month, following EU’s interest in a green finance industry.

Directed against environmentally harmful processes, the bill would enforce “minimum environmental sustainability standards” on virtual assets in the EU. When news of the draft legislation first came out, it kicked up something of an uproar within the crypto industry. 

Ahead of the vote, numerous industry experts and pro-crypto legislators spoke against the proposal. Certain individuals stated that it posed an existential threat to digital assets within its jurisdiction.  While the bill would at first significantly affect miners within the EU region, there’s evidence its effect could ripple into the entire market.

On Monday, the parliament’s committee on economic and monetary affairs voted on the bill. The draft eventually proved unsuccessful, as 32 members voted against it as opposed to the 24 who voted in favor of MiCA.

While the committee did vote to establish a regulatory framework for digital assets, it removed the provision earlier aimed at the PoW consensus mechanism.  Over the past few years, the crypto industry has repeatedly come under fire due to its use of energy-intensive processes. Consequently, the proof-of-work consensus mechanism has always been at the forefront of this particular battle.

Proposed Ban on Energy-Intensive Proof-of-Work System

Regulators worldwide have had their sights set on cryptocurrencies, especially since China’s nationwide ban. Following the crackdown on miners in the country, increased scrutiny forced the mining industry to diversify. As a result, miners majorly migrated to the USA and Kazakhstan nations which are dependent on gas and coal. This is in stark contrast to China’s plentiful hydropower.

With the EU currently amid an energy crisis, the de-facto ban on PoW coins could be considered a necessary move. Both the largest cryptocurrencies on the market deploy the PoW system in their production. Ethereum, of course, could take itself out of this conversation as its Merge to PoS consensus nears.

An earlier version of the MiCA bill had proposed a complete ban of PoW tokens. However, the new one had assured the community of time for the networks to improve. In a statement, parliament member Ernest Urtasun said the draft bill wasn’t to outlaw pertinent cryptocurrencies.

Our proposal was more complex and more taking into account the need of the industry to adapt,” Urtasun assured. 

For some time the EU has been trying to regain its feet in terms of energy; working towards being independent of Russian gas. Putin’s recent invasion of Ukraine has further heightened the need for this and possibly sparked old debates on environmentally-harmful digital assets.

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Ethereum’s upgrade to Ethereum 2.0 will feature a transition to the more eco-friendly PoS consensus mechanism. While Bitcoin’s green prospects are not yet clear.

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