No Legal Basis to Ban or Limit Bitcoin Mining: EU Official
The European Commission has confirmed that it is paying attention to concerns about rising electricity consumption for cryptocurrency mining in the European Union, according to European Commissioner Mariya Gabriel, who oversees digital economy and society.
According to a notice on the European Parliament website, Gabriel addressed the issue in response to a question posed to the parliament.
Power Consumption Accelerates
The Commission, Gabriel noted, is aware of the concerns on growing electricity consumption for cryptocurrencies and blockchain technology in general.
The issue is especially critical for bitcoin, for which mining is concentrated in China. While two-thirds of all mining takes place in China, according to some estimates, some amount of mining takes place in other places.
There is currently no legal basis to prevent or limit energy consumed within the EU, the statement noted. But given that electrical consumption is an economic activity, it is subject to EU rules that apply to energy efficiency, the power sector and greenhouse gas emissions. Greenhouse gas emissions in the power sector are covered by the EU emission trading system.
The cryptocurrency mining business model is based on delivering a high valuation of cryptocurrencies, the statement noted. The increasing electricity consumption and cost is likely to modify the value of and demand for cryptocurrencies.
Mining Is Legal
The Commission has not invoked any way to track cryptocurrency mining because it is not an illegal activity. However, the Commission will review the activity as it impacts the demand for energy.
It is important to keep in mind that many promising applications of blockchain technology do not have extensive need for processing power, Gabriel’s statement further noted.
In January, International Monetary Fund Managing Director Christine Lagarde told the World Economic Forum that bitcoin mining is too energy intensive. Many analysts and environmentalists have sounded the alarm on the industry’s power usage, and Lagarde said that it has turned in to a “big concern” given that the world is already battle climate change.
Also read: IMF’s Lagarde says that bitcoin mining consumes too much electricity
EU Explores Blockchain
The European Commission announced plans last year to establish an EU Blockchain Observatory in response to a European Parliament mandate to strengthen technical expertise and regulatory capacity. The project will include an observatory and a forum to gather input on distributed ledger technology and blockchain technology. The goal is to establish an EU expertise resource for forward-looking blockchain topics and develop EU use cases.
Another goal is to assist the EC in determining what role – if any – government authorities can play to encourage the creation of such technologies and to develop policy recommendations.
Featured image from Shutterstock.