The clause in the MiCA (Markets in Crypto-Assets) proposal that would have resulted in a blanket ban of crypto mining activities dubbed “environmentally dangerous” has been removed.
MiCA Aimed Specifically At Cryptocurrency Mining
MiCA law proposed restrictions for the usage of cryptocurrencies. The European Commission originally proposed the regulation in 2020.
The first version of the bill gave a prerequisite for cryptocurrencies accepted in the union. Cryptos that depend on ecologically unsustainable consensus techniques will not be accepted. This version would have taken effect starting from 2025. It further specifies that these systems must “meet minimal environmental sustainability requirements.”
This means that all currencies based on the proof-of-work mechanism would be banned in Europe. Several environmentalists have lamented the harm crypto mining activities had on the environment, given the large amount of electricity they needed to operate.
BTC, which consumes more than 170 terawatts per hour (TW/h) of electricity each year, would probably be the main target of the rule. Other mining-based cryptocurrencies like Dogecoin, Ethereum, Bitcoin Cash, and Litecoin would probably be subject to the same restriction, even though such coins consume far less electricity than Bitcoin.
Revision Of The Old Rule
According to a story posted by a news source, BTC-ECHO, the EU (European Union) has backtracked on its contentious intention to restrict the power-consuming proof-of-work blockchain process.
As stated by U.Today, a recent change to the proposed MiCA legislation removed a clause barring enterprises from transacting with Bitcoin and its mining operation. After receiving harsh criticism, Stefan Berger, the legislator who brought up the MiCA proposal, rushed to Twitter to explain that the legislation was not intended to be a complete ban on BTC. On the 25th of February, the European Union postponed a voting decision on the regulatory framework for the expanded cryptocurrency industry.
The German lawmaker, Stefan Berger, stated the clause, which could have ruined the cryptocurrency and mining activities within the Eurozone, has now been abolished.
It is uncertain when the European Parliament will vote on the current edition of the MiCA proposal. However, Berger noted that the election would most likely be held between March and April. If passed, the bill will be subject to more votes and discussion before it is effective.
Although the purpose of the law is to curb crypto use in Europe, it is uncertain if it will be successful. Since most digital currencies are transferred using a P2P system, countries can only limit custodial wallets, exchanges, and centralized services to a certain extent.