EU Investigates Energy-Hungry Blockchains – Bitcoin (BTC) Mining Could Reduce CO2 by 8% Worldwide

• The European Commission earmarks $842,000 for a comprehensive study to evaluate the ecological harm inflicted by crypto technologies, especially focusing on the energy-ravenous proof-of-work mechanism.
• The outcome of this study could steer future EU policies aimed at diminishing crypto’s carbon footprint and could lead to the introduction of new energy efficiency labels for blockchains.

The realms of cryptocurrency and blockchain technology, despite their groundbreaking potential, have found themselves under the environmental scanner owing to their significant energy consumption. The European Commission, on Tuesday, announced a €800,000 ($842,000) contract aimed at probing the “significant harm” crypto technologies could be rendering to the environment.

Bridging Crypto with Climate Goals

The scheduled study, inviting bids until November 10, aims to craft standards that could potentially shape future EU policies to mitigate crypto’s adverse environmental impacts. This initiative also hints at the inception of new energy efficiency labels dedicated to blockchain technologies.

The European Commission’s tender documents have articulated concerns over how crypto-assets could potentially derail the bloc’s ambition to curtail greenhouse gas emissions. These documents also hint at the possibility of integrating new sustainability standards in the forthcoming legislation.

A cornerstone of the EU lawmakers’ concern stems from the energy-intensive proof-of-work (PoW) consensus mechanism, which serves as the backbone for blockchains like Bitcoin. The palpable anxiety around crypto’s energy usage was evident during last year’s deliberations on the bloc’s Markets in Crypto Assets regulation. Although the discourse veered close to what some dubbed as a Bitcoin ban owing to environmental considerations, the final narrative required issuers to disclose environmental impacts through a yet-to-be-finalized method.

The meticulous study commissioned by the EU will unfold over a year, delving into various environmental aspects like crypto’s utilization of water, generation of waste products, and consumption of natural resources alongside energy. This endeavor by the EU not only mirrors a growing global sentiment but also underscores a concerted effort to align disruptive blockchain technologies with long-term ecological sustainability.

The ripple effects of this initiative could resonate beyond the EU, catalyzing a broader global dialogue and action towards greening the crypto space. This move also possibly opens a window for the emergence of more eco-friendly blockchain alternatives, ensuring that the transformative potential of blockchain can harmoniously coexist with our environmental imperatives.