The European Central Bank (ECB) is based on the Proof of Work (PoW) system in its report. bitcoin as cryptocurrencies It assesses that a mining ban is “likely” for
In the report, the authors primarily focus on Bitcoin’s electricity consumption. According to the report, this figure is currently between the annual consumption of Spain and the Netherlands.
European Central Bank Report Recommends Taxation for Bitcoin Transfers
The ECB writes that due to rising energy prices as a result of the war between Russia and Ukraine, lawmakers should “take a closer look” at the efficient use of electricity resources.
Also, according to the report, due to the climate neutrality goal, renewable energy sources should not be allowed to be affected by cryptocurrency mining.
The central bank considers a number of policy measures “possible” by governments to address the “significant CO₂ footprint” of PoW-based cryptocurrencies.
The European Central Bank is also proposing a “carbon dioxide tax” for Bitcoin transfers to take place.
ECB Compares Proof of Work Cryptocurrencies to Fossil Fuel Cars
In addition, a complete ban on mining could also be considered, according to the report.
Here, the authors refer to China, where cryptocurrency mining has been banned for over a year. This could slow the adoption of PoW-based cryptocurrencies and also encourage more environmentally friendly alternatives such as Proof-of-Stake (PoS).
To support its argument, the ECB cites the EU banning internal combustion vehicles from 2035, saying that Bitcoin and other PoW-based cryptocurrencies are equivalent to them, while PoS is similar to electric cars.
According to the report, government officials have the option to promote the crypto version of the electric vehicle or to restrict or ban the crypto version of the fossil fuel-powered vehicle.
*Not investment advice.