On October 18, the European Union (EU) revealed a set of documents containing its action plan for setting up the European Green Deal and the REPowerEU Plan. Both initiatives aim at saving energy by digitalizing the energy sector.
However, the EU launched the REPowerEU plan in May 2022 following Russia’s attack on Ukraine. The invasion has hurt European energy supplies. According to the European Commission, the Russian issue was an opportunity to “fast-track plan towards the transition to green climate.”
The commission added that an essential part of the plan is to control the energy consumption in the ICT industry, with blockchains having a notable mention under data centers. The “Commission Staff Working Document, CSWD” also states that Europe makes up about 10% of global crypto mining operations.
Germany and Ireland lead other European nations in this aspect. However, Sweden is going through a significant surge in mining activities after China banned crypto mining. In addition, multiple media reports state that the European Securities and Markets Authority will draft technical laws for the cryptocurrency mining industry.
The EUBOF’s Observations
Authors of the CSWD referred to an undated document credited to the European Blockchain Observatory and Forum (EUBOF) committee. The EUBOF document recommended law options that could reduce the adverse impacts of crypto assets technology on the climate. The CSWD also indicated that the EUBOF document will be crucial to a report on cryptocurrencies’ environmental effects, which will be out by 2025.
The first EUBOF suggestion was that the EU makes laws that reduce the attractiveness of Bitcoin investments which should lower the price of Bitcoin. The report also revealed that crypto investors or traders need more knowledge about the energy use of cryptocurrencies, particularly crypto mining.
They advised the EU to take the initiative and create uniform blockchain regulatory standards. The European Communication further notes that energy used for crypto mining has increased by over 100% in the last two years.
It admitted that the proposed Markets in Crypto Assets (MiCA) regulations would compel crypto market actors to provide environmental disclosures. However, the European Commission, the executive branch of the EU, also advises member nations to take necessary steps to decrease the energy consumption from crypto asset miners.
The commission said it is making this suggestion because of the tight energy that usually accompanies the winter season and the unpredictability of Russia’s energy supplies. The commission also advised member nations to pause tax breaks and other fiscal measures for crypto-miners. Norway is already planning to stop crypto miners’ tax breaks.