EU meeting notes show officials don’t understand how Bitcoin works
EU officials may be willing to let Proof of Work-powered Bitcoin go to the wall while protecting what they see as more sustainable cryptos such as Ethereum, according to recently-unearthed minutes from a European Commission meeting.
During the meeting, which took place in November last year, EU officials and a group of Swedish financial regulators discussed the negative environmental impact of Bitcoin’s Proof of Work (PoW) mechanism.
And the minutes, uncovered via a freedom of information request by German outlet netzpolitik.org, reveal that they even considered an outright ban on Bitcoin trading across the EU.
The uncovered documents also show that the European Commission is strongly in favor of protecting the world’s second-largest crypto, Ethereum.
Ethereum is in the process of a widely publicized move from PoW to the less energy-intensive Proof of Stake (PoS). This transition is known as ‘the Merge.’
A document dated February 22 shows the meeting notes between EU officials and Sweden’s financial supervisor and environmental agency. The partly-redacted pages include: “If Ethereum is able to shift, we could legitimately request the same from BTC. We need to ‘protect’ other crypto coins that are sustainable. Don’t see need to ‘protect’ the bitcoin community.”
Officials seemed so keen on PoS, they even wrote: “How would the disappearance of bitcoin affect consumers? Participants in BTC are fully aware of the volatility of the currency/investment risk. Do not need additional protection measures (our emphasis).”
It’s worth noting that just last month, the EU voted down a proposal that would have effectively banned the mining and trading of the most energy-intensive cryptocurrencies such as Bitcoin.
While an EU-wide blanket ban on Bitcoin mining sounds like a bold move, some suggest that it would actually have little or no effect on the digital currency’s environmental impact. Namely, because very little mining actually takes place in Europe.
In fact, it’s almost impossible to track exactly where Bitcoin is being mined. This is why some experts believe that targeting Bitcoin’s price is the only way to get it under control (lower price means less incentive to mine). And there are those who believe that the EU simply doesn’t understand enough about either Bitcoin or Ethereum to be making such a call.
After all, Bitcoin uses the amounts of energy it does because that’s what it needs to differentiate it from existing government-issued currencies. It enables Bitcoin to distribute coins fairly to anybody and to track and secure every transaction.
Given its unlimited supply, Ethereum proponents say it’s time for the network to evolve beyond PoW.
New York also has PoW in its sights
The EU isn’t alone in targeting PoW cryptocurrencies in an effort to protect the environment. Lawmakers in New York State are preparing to vote on a proposed bill that would place a two-year ban on the issuing or renewal of permits to fossil fuel-fired mining operations in the state.
Those who proposed the bill believe that such facilities are standing in the way of New York’s emissions targets. Specifically, its goal of reducing greenhouse gas emissions by 40% in the next eight years.
These targets were outlined in the 2019 Climate Leadership and Community Protection Act.
Read more: Core developer wants to fork Bitcoin for quantum resistance
Unsurprisingly, as with the EU’s proposals, many are skeptical about just how effective such a move would be. There are also concerns about how harmful it could be to the wider crypto industry.
For example, John Olsen, New York State lead for the Blockchain Association told CoinDesk: “A two-year mining ban sends a really bad message to the blockchain industry, to crypto companies, to Web 3 companies, that New York is saying ‘You’re not welcome here.’”
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