Europe proposes an energy-efficiency label for blockchain networks

Updated: 19 October 2022

Disclosure

Don’t invest unless prepared to lose all the money you invest. This is a high-risk investment, you shouldn’t expect to be protected if something goes wrong.

Join Our Telegram channel to stay up to date on breaking news coverage

The European Union plans to have an energy efficiency label for blockchain networks. The European Commission has released these measures as part of the plan to control energy consumption within the ICT sector.

Europe to have energy efficiency level for blockchains

The European Commission has introduced an environmental labeling strategy for data centers. It also has an energy label for computers while installing measures that will improve the clarity of the energy used by telecom services.

Energy commissioner Kadro Simson said that these new measures aim to boost the energy sector’s efficiency while boosting people’s ability to access renewable energy sources.

“The aim is to make our energy system more efficient and ready for increasing share of renewable energy sources,” Simson said. “For this, we need more innovative digital solutions and a grid that is much smarter and more interactive than it is today.”

The program will also offer financial support that will go into research associated with digital technologies within the energy sector using several programs led by the public sector. However, the commission has not said whether the support would go toward the crypto sector.

The European Union has concerns over the energy demands of proof-of-work mining networks like Bitcoin. However, the region has not imposed an outright ban compared to countries like China that have banned cryptocurrency mining.

Earlier this year, the Economics and Monetary Affairs Committee at the European Parliament rejected a proposal to ban PoW crypto mining activities. The committee removed the relevant paragraph proposing the ban before the Markets in Crypto Assets (MiCA) bill was voted upon.

Moreover, this was not the first bill focused on the environmentally friendly nature of crypto assets. The MiCA legislation will be effected towards the end of 2023. The bill proposes that some market participants disclose their environmental and carbon footprint.

Regulatory interest in crypto mining

The regulators based in the EU are not the only ones paying close attention to crypto mining activities. The issue has been attracting much attention across different countries, with the high energy consumption of PoW networks like Bitcoin.

The Senator of Massachusetts, Elizabeth Warren, and several other lawmakers based in the US sent a letter to US Senator Pablo Vegas, who is also the CEO of the Electric Reliability Council of Texas (ERCOT), addressing concerns on crypto mining.

Warren raised concerns about crypto mining activities in Texas and the effects of these operations on climate change. She also questioned how crypto mining would affect the stability of the energy grid and the subsidies usually paid for by retail consumers.

On the other hand, proof-of-stake networks have been touted as more environmental-friendly. The Ethereum blockchain switched from a PoW to a PoS consensus in September 2022. The transition reportedly lowered the energy consumption of the Ethereum blockchain by more than 99%. Other PoS networks also touted as energy-friendly include Solana, Polkadot, Cardano, and more.

Join Our Telegram channel to stay up to date on breaking news coverage