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As the bitcoin price has rocketed higher, so has the bitcoin network’s electricity demands with the process of securing the network, confirming transactions and minting new coins thought to use a similar amount of electricity annually as some small countries.
Now, after an energy-reducing upgrade to ethereum, the second-largest cryptocurrency after bitcoin, was pushed back to the end of the year, internal European Union documents have revealed the extent of anti-bitcoin sentiment among EU officials—and their desire to “protect” the likes of ethereum.
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Bitcoin, ethereum and other cryptocurrencies have been criticized for their energy demands and … [+]
Earlier this year, Swedish financial regulators and the EU’s European Commission discussed the possibility of banning bitcoin’s proof-of-work (PoW) mining mechanism due to its environmental impact, according to documents published by German website Netzpolitik and obtained under the EU’s freedom-of-information laws.
Officials went as far as suggesting the EU enact an outright ban on trading bitcoin to curb its overall energy consumption and suggested applying pressure to the bitcoin community and developers to follow ethereum in transitioning to the less energy demanding proof-of-stake (PoS) mechanism.
“If ethereum is able to shift, we could legitimately request the same from bitcoin,” minutes of the meeting showed. “We need to ‘protect’ other crypto coins that are sustainable. Don’t see [the] need to ‘protect’ the bitcoin community.”
Last month, the EU voted against a ban on proof-of-work bitcoin and crypto mining, which, according to the University of Cambridge Bitcoin Electricity Consumption Index, currently consumes roughly 139 terawatt-hours (Twh) of electricity every year—more than is used by the country of Finland.
Some of the minutes’ text, including the response to a question on a complete bitcoin trading ban, has been redacted to protect the “ongoing decision-making process.”
“How would [the] disappearance of bitcoin affect consumers,” asked one official involved, with the response reading: “Participants in bitcoin are fully aware of the volatility of the currency/investment risk.”
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The bitcoin price has rocketed higher in recent years, boosting the ethereum price and other … [+]
However, some have warned trying to ban bitcoin mining or trading is unlikely to have an affect on bitcoin’s energy consumption, with economist Alex de Vries telling Netzpolitik that “targeting the bitcoin price is the only thing likely” to bring down bitcoin’s carbon footprint. According to De Vries policymakers would have to tax transactions or restrict the trading of certain cryptocurrencies.
As the bitcoin price climbs, more computers are directed toward the bitcoin network, making it more secure but also increasing the amount of electricity the network uses to power and cool the specialized cryptocurrency mining graphics processing unit (GPU).
Meanwhile, bitcoin’s price growth as also sparked fears the “fast evolving” crypto market could soon become a threat to global financial stability.