Bitcoin, as well as the other Proof-of-Work (PoW) cryptocurrencies, felt the pressure of the European Union reportedly working to pass a bill to ban all PoW cryptos citing environmental concerns.
The EU ban on PoW cryptos pushed Bitcoin down 1.5% before regaining some of the losses and securing a market capitalization of little under $741,7 billion. Ethereum also went down but managed to climb back up to levels above $2,500 to trade at $2,584.77 with a market cap of $310 billion.
The rest of the crypto sector is also on a downwards spiral, pushing the total crypto market cap down to $1,73 trillion after hitting a weekly high of $1,86 trillion.
EU’s PoW ban and its importance
The European Parliament is preparing to vote for the controversial Markets in Crypto Assets (MiCA) framework. The MiCA draft legislation adds a clause to ban all energy-intensive digital assets and only allows Proof-of-Stake cryptos since they demand much less computing power. The controversial framework vote comes as the U.K. proposes a complete ban on all Bitcoin ATMs in the country.
According to the legislation draft, MiCA requires all digital assets to be subject to EU’s “minimum environmental sustainability standards with respect to their consensus mechanism used for validating transactions, before being issued, offered or admitted to trading in the Union”.
“Extremely high stakes vote in the EU. That such a proposal made it this far is extraordinarily concerning and unlikely to stand up to practical reality”, Circle CEO Jeremy Allaire noted on the matter.
Meanwhile, Stefan Berger, the EU parliamentarian who looks after the MiCA framework, noted that many of the green-oriented parties are arguing that PoW is bad for the environment.
“The Greens and Socialists, as you can imagine, are criticizing the proof-of-work concept and criticizing the energy use, saying that bitcoin needs more energy than the Netherlands”, Berger added.
PoW and energy consumption – does it really matter?
The energy consumption for Bitcoin mining purposes has always been a matter of intensive debate, as China banned crypto mining last year, and Tesla stopped Bitcoin payments due to environmental concerns. However, the crypto industry shifted towards the use of renewable power for Bitcoin mining.
Meanwhile, VanEck Director Gabor Gurbacs posted a comparison chart, showcasing Bitcoin’s carbon footprint, comparing it to sectors like gold production, aviation, data centers, and global banking, which are all over Bitcoin in terms of carbon emissions.
It turns out that in 2021 Bitcoin mining produced 41 metric tons of CO2, while the global banking sector accounts for 130 metric tons of CO2. One of the biggest carbon produces is still the aviation industry, reaching close to 2000 metric tons of CO2. Furthermore, Bitcoin seems to be less polluting than tumble dryers.