EU Pushes for Deeper Insight into Crypto's 'Substantial' Environmental Impact
The European Commission's executive branch has allocated $842,000 for a study aimed at addressing the environmental impact associated with energy-intensive proof-of-work technology in the crypto sector.
This initiative stems from the Commission's concerns about the notable environmental footprint attributed to crypto-assets. The study, which will accept bids until November 10, aims to establish standards that could potentially shape future EU policies regarding climate change mitigation in the crypto space. It also intends to introduce new energy efficiency labels specific to blockchain technologies.
The European Commission emphasized in tender documents that there is substantial evidence indicating that crypto-assets can have a detrimental effect on the climate and environment. This impact could potentially undermine the EU's objectives to reduce greenhouse gas emissions. It was suggested that these new sustainability standards may find their way into forthcoming legislations.
EU policymakers express apprehension regarding the energy-intensive proof-of-work consensus mechanism that underlies blockchains like Bitcoin. During negotiations for the Markets in Crypto Assets (MiCA) regulation last year, there was a near consensus on implementing stringent environmental controls, which some interpreted as a potential ban on Bitcoin. While the final text did not go that far, MiCA does mandate issuers to disclose environmental impacts, although the precise methodology is yet to be finalized.
The EU-conducted study, spanning a year, will scrutinize eco-centric aspects, including water usage, waste generation, resource consumption, and energy utilization within the crypto industry.
The energy consumption of cryptocurrencies has also garnered attention from the U.S. government. A 2022 White House report attributed approximately 0.3% of global greenhouse gas emissions to major crypto assets. However, advocates of crypto argue that mining activities could potentially contribute to the decarbonization of energy grids.
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