The European Central Bank (ECB) recently published several new research reports. One of them zooms in on the climate impact Bitcoin (BTC) and crypto have through mining activities. The ECB seems to move toward proposing strict bitcoin mining regulations, noticed venture advisor at Presight Capital Patrick Hansen. Would this be disastrous for Bitcoin?
ECB shows bitcoin mining impact
In the research report, the ECB shows several graphs that try to paint a clearer picture of the impact of bitcoin mining. The central bank compares the electricity consumption of Bitcoin with entire countries and concludes that the network consumes more electricity than Netherlands, Spain, and Austria.
Some may find these comparisons somewhat dishonest, as Bitcoin is a global network. A fairer comparison would be the total consumption of the gold industry or the whole finance industry. Still, the ECB concludes that it is unlikely that the European governments won’t refrain from taking any action against bitcoin mining:
“It is highly unlikely that EU authorities will restrict/ban fossil fuel cars by 2035 but refrain from taking action for assets whose current yearly carbon emissions are enough to negate most (..) countries’ emission savings & (..) global net savings from (..) electric vehicles.” – Tweeted Patrick Hansen.
What would a European bitcoin mining ban look like?
Regulating the bitcoin mining sector is quite complicated. The reason for this is the fact that anyone can buy bitcoin miners and start earning BTC. You only need a bitcoin mining rig, an internet connection, and electricity. You won’t need to register yourself anywhere, for example.
Therefore, a European mining ban would likely primarily aim at big mining farms. These are facilities where companies mine bitcoin with sometimes thousands of miners at once. Their licenses can be revoked as part of such a ban. But ideally, we would like to see logical and reasonable regulations, including specific requirements for these businesses.
Some of these requirements could be that these bitcoin mining farms must use sustainable energy. This would then positively impact many levels; bitcoin becomes greener, emissions decrease, and sustainable energy sources become more profitable as demand rises in a more balanced way.
A plus for smaller bitcoin miners
If the European Union does try to blanket ban BTC mining like the communist regime of China did, it could still positively impact Bitcoin. It could lead to mining becoming more profitable again for smaller miners. That way, Bitcoin becomes more decentralized and less dependent on larger bitcoin mining farms. It would be interesting, however, to see how the EU enforces such a mining ban if it decides to go on that path!