EU Regulator Suggests A Ban on Proof-of-Work Crypto Mining.

The European Securities and Markets Authority (ESMA) is urging the European Union to prohibit cryptocurrency mining for assets that use the proof-of-work (PoW) methodology, such as Bitcoin.

ESMA’s vice chair Erik Thedéen remarked in an interview with the Financial Times that the EU should instead prioritize proof-of-stake assets owing to efficient power use.

Thedéen said that if the EU does not act immediately, ongoing Bitcoin mining in the region might stymie efforts to mitigate the consequences of climate change by lowering carbon emissions.

According to Thedéen, the rising institutional acceptance of cryptocurrency necessitates a shift in emphasis to energy usage.

He said:

“The financial industry and a lot of large institutions are now active in cryptocurrency markets. We need to have a discussion about shifting the industry to a more efficient technology. <…> The solution is to ban proof-of-work,”

One of the most serious critiques leveled at Bitcoin is its high energy usage, which is becoming a point of contention in a number of nations planning to regulate the cryptocurrency.

Following the criticism, the majority of Bitcoin mining firms have converted to renewable energy sources. For example, the Bitcoin Mining Council claims that 65.9% of its member firms employ green energy to power their mining operations.

Notably, certain cryptocurrencies, like as Ethereum, are shifting away from the PoW protocol in favor of PoS mining, which is less energy-intensive since it allows users to compete for the privilege to record transactions depending on how much they spend in the network.

Despite the regulator’s warning, figures from the Cambridge Centre for Alternative Finance show that the EU does not account for a sizable portion of PoW mining. The activity is most widespread in the United States (35.4%), followed by Kazakhstan (18.1%), and Russia (11.23%).

However, the location may attract Chinese operators who are relocating as a result of the country’s entire ban on Bitcoin mining, claiming concerns to financial stability.

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Patrick

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