Full Bitcoin Mining Ban On Europe? ECB Think Its Probable
presight capital risk advisor patrick hansen shared the results of three new research papers on bitcoin and crypto climate risk, decentralized finance (defi), and stablecoins. Published by the European Central Bank (ECB), the articles highlight the approach taken by the financial institution towards the nascent asset class.
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Reading: Eu bitcoin ban
ecb research compared bitcoin mining to someone driving a fossil fuel car. In this sense, they argued that public authorities have the option to encourage it, impose a carbon tax or prohibit it. research says the latter is very likely.
As seen below, research claims that bitcoin mining consumes more energy than the netherlands, spain, austria and other massive sources of energy. btc mining consumption, as presented by the ecb, has been increasing electricity consumption over the years.
In 2022, the Bitcoin Mining Council (BMC) published a report on this blockchain’s energy consumption. In contrast to the report published by the ECB, this organization claims the Bitcoin mining industry is one of the most sustainable in the world with the rapid adoption of clean energy.
As seen below, members comprising more than 50% of the bitcoin hashrate have a larger sustainable energy mix than most countries in the world. Overall, BTC mining consumes less than 0.1% of the world’s energy at 247 terawatt hours (twh).
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However, Hansen claims that the European Union will take action on what they consider to be the “fossil fuel” powered blockchain and its mining industry. according to the report:
eu authorities are highly unlikely to restrict or ban fossil fuel cars by 2035, but refrain from taking action for assets whose current annual carbon emissions are sufficient to negate the emissions savings of most of the countries (…) & (..) global net savings from (..) electric vehicles.
How The European Central Bank Plans To Regulate Bitcoin
the european union and its central banks are preparing to introduce a new regulation for bitcoin and cryptocurrencies. the financial institution wants to regulate the nascent asset class “in depth” with the implementation of two sets of regulations called regulation on markets in crypto assets (mica).
The first version of this package will come into force in 2024. The second version is still under development, but could include a mechanism to regulate bitcoin and the entities that maintain its blockchain, defi and other crypto intermediaries. ECB President Christine Lagarde said:
mica 2 should fully cover decentralized finance (defi), currently the focus on financial intermediaries. where there is no middleman, regulation does not apply, and that is the case with bitcoin. so bitcoin won’t be covered by mica 1, but hopefully mica 2 will take it into account.
lagarde, other members of the ecb and members of international regulators, politicians and financial institutions converged on one point: bitcoin and cryptocurrencies are becoming a risk for the financial system and consumers.
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However, some experts believe that mica 2 goes too far in regulating the emerging asset class. the first iteration of this package offers a framework and could provide crypto businesses with clear rules. the second could simply pursue control of the underlying assets.
…a spoonful of the fuel of your daily nightmares…
… the president of the ecb, christine lagarde, asks the eu to approve a “mica 2” that directly regulates bitcoin and other decentralized technologies (instead of limiting itself to regulating cryptoactive intermediaries (as “mica 1”))…
— _gabrielshapir0 (@lex_node) June 21, 2022
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