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It is unlikely that a crackdown on fossil fuel cars will exclude Bitcoin mining, says ECB Research.
The European Central Bank recently released a new research paper suggesting that Bitcoin could be restricted along with fossil fuel vehicles. The article, posted on Tuesday, refers back to reports that emphasize the high rate of energy consumption in the crypto industry. These reports, as often repeated, indicate that PoW mechanisms like Bitcoin consume enough electricity to conveniently power mid-sized countries like Argentina or Austria.
If Fossil Cars Go, Bitcoin Should, Says ECB
The European Union plans to impose restrictions on fossil fuel car usage by 2035, pushing for a greener climate. However, the European Central Bank strongly believes fossil fuels would not be the only industry to suffer a crackdown. ECB opines that this decision will impact Bitcoin and other PoW protocols as well, after comparing Bitcoin’s energy-consuming consensus mechanism to fossil fuel cars.
Additionally, in the article, the bank likened the alternative proof-of-stake mechanism to electric cars. Since the EU already has carbon reduction targets that impact fossil fuel cars, the publication emphasized that Bitcoin might be next.
Regarding the different approaches the government would likely take to regulate digital assets, the articles cite two likely paths. The first option would involve incentivizing the electrical car-like equivalent. This would be possible by requiring disclosure and imposing a carbon tax on crypto transactions. The other option, however, might involve an outright ban on mining activities.
Already, Buterin’s Ethereum has begun the process of moving to the less energy-intensive PoS consensus method.
Publication Hopes to Impact EU Decisions
The research article in question is not in any way connected to the European Union authorities. However, the European Central Bank is a major component of the Eurosystem. Also, it is one of the institutions that make up the European Union. The ECB expects the facts presented in it to impact the EU’s regulatory decisions in the future.
In addition, the ECB demands the universal regulation of digital assets. As such, crypto mining activities and the dangers to world climate are not the only issues the ECB is protesting. Other papers it has released crack down on other aspects such as decentralized finance and stablecoins.