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The European Union’s (EU) proposed legislative framework for governing virtual currencies, Markets in Crypto Assets (MiCA), still poses a threat to the use of proof-of-work cryptocurrencies.
While after some serious industry backlash, a previous draft of the MiCA framework which contained a strongly worded provision against environmentally unsustainable crypto mining practices was scrapped, a new draft has surfaced, which is up for vote on Monday March 14.
Although significantly toned down from previous versions, the draft holds a similar provision saying that:
“[Crypto assets] shall be subject to 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.”
The provision also states that energy-intensive crypto assets that are already in use prior to the legislation coming into effect in 2025, will need to “set up and maintain a phased rollout plan to ensure compliance with such requirements.”
Proof-of-work currencies have become an ‘easy target’ by the EU policymakers, which perceives the consensus mechanism that underlies popular cryptocurrencies like Bitcoin and Ethereum to be energy-intensive and therefore an environmental concern. A claim that has been debunked multiple times with cases made for Bitcoin as catalyst in the world’s transition to green energy. Prominent Bitcoin business man, Anthony Pompliano, recently said there is “no need to apologize for Bitcoin’s energy usage.” The world’s first Bitcoin nation, El Salvador, is taking the lead in mining Bitcoin by using the country’s abundance of volcanic energy.
The crypto community has responded quickly on the news. Popular crypto hardware wallet provider Ledger has released a statement on its company blog saying:
“Individuals and organizations should be free to choose the technology most appropriate to their needs. Policymakers should neither impose nor discriminate in favor of a particular technology. This is deeply concerning and would have serious consequences for Europe.”
MicroStrategy CEO and leading Bitcoin Bull, Michael Saylor tweeted the following and reached out to the European Parliament: