For cryptocurrencies, the year 2020 was a game-changer. Despite the damage wrought by the Covid-19 pandemic over the world, Bitcoin's price has eclipsed previous highs, due mostly to rising institutional demand, which many in the cryptocurrency industry expected would catapult the currency to unthinkable heights. However, unless specific rules are enacted, we doubt that favorable advancements in the crypto industry will continue. While the cryptocurrency sector has been anticipating more regulatory oversight, Proof-of-Work (PoW) cryptos have just lately been a source of worry. According to recent reports, the European Union (EU) is on the verge of making crypto mining illegal owing to energy considerations.
Swedish officials are pushing for a crypto mining restriction across the European Union's 27 member states, concerned that solar power is being used to mine cryptocurrencies like bitcoin rather than being channeled for public use. Leaders in Germany, Spain, and Norway have all expressed support for the demand.
What is Crypto Mining and How Does It Work?
Crypto mining is a challenging method for verifying and adding new transactions to a cryptocurrency's blockchain using the proof-of-work (PoW) mechanism. The tournament winner earns a percentage of the prize money as well as transaction costs.
What Is the Impact of Crypto Mining on the Environment?
The most noticeable environmental effect of bitcoin is the electricity required for the mining process, which is how new digital money are created. Mining is utilized in a number of cryptocurrencies, however most people are aware with Bitcoin mining. However, it has been increasingly difficult to produce new units of money through mining since Bitcoin's introduction. Because the currency's supply is capped at 21 million units, the more units minted implies fewer units are available to mine, and minting new ones necessitates more processing power. The projected carbon footprint of electricity-generating power plants is a key source of environmental concern. A single Bitcoin transaction is estimated to need 2,292.5 kilowatt-hours of electricity, enough to power a typical US home for approximately 78 days. There's also the issue of physical electronic waste to think about. Computers, graphics cards, and custom-built ASIC rigs, among other things, are used to mine. People are constantly upgrading and discarding obsolete equipment in order to get an advantage in the race to mine more coins, resulting in up to 30,000 tonnes of electrical waste per year.
According to EU Parliament member Stefan Berger, who manages the planned legislation package for handling crypto assets in the union, a potential ban on crypto mining would be a death sentence for bitcoin in the EU. According to Advocate P.M. Mishra, Managing Partner of Finjuris Counsel FZ-LLC, UAE, Finlaw Associates, India, and BCH Consulting, Europe, the newest version of the European Union's (EU) proposed legal framework for controlling virtual currencies, Markets in Cryptocurrencies (MiCA) still has a clause that could restrict the use of actual evidence cryptocurrencies.