BREAKING: ECON committee of the EU votes against PoW ban. Bitcoin breathes sigh of relief

Namrata Shukla
Source: Skalex

The European Union parliamentarians have voted against the Markets in Crypto Assets [MiCA] legislation, which means that mining Bitcoin or Ethereum is allowed.

Patrick Hansen, whoo has been following up with today’s parliamentary session noted that a majority of the members of the European Parliament from the “EPP, ECR, Renew & ID voted against it, while a minority of MEPs from Greens, S&D, and GUE mainly voted in favor.”

The MEPs supported an alternative amendment from Stefan Berger, a German economist and politician of the Christian Democratic Union [CDU] which can be found here. Hansen explained,

What’s going on in EU?

Elon Musk is challenging the President of Russia, Vladimir Putin for one-on-one combat for Ukraine, while the rest of the world was feeling the heat from Russia’s invasion of Ukraine. The rise in gas price was one of the impacts of the ongoing war, it was also among the most noticeable ones. With industrialization at its peak, the need for oil and gas has never been higher and Russia being among the top supplier, it was nothing short of a real-life apocalyptic event.

The United States, along with the United Kingdom and the European Union already announced restricting Russian oil and gas imports, resulting in the prices of oil and gas sharply rising. Interestingly, of about five million barrels of crude oil it exports each day, more than half of that goes to Europe.

This highlighted the heavy dependency of Europe on Russia when it comes to oil. As reported, the European Commission was now formulating a plan to “make Europe independent from Russian fossil fuels well before 2030.”

As per the European Commission,

“REPowerEU will seek to diversify gas supplies, speed up the roll-out of renewable gases and replace gas in heating and power generation. This can reduce EU demand for Russian gas by two-thirds before the end of the year.”

With the increasing threat from Russia over crude oil, Europe has escalated its research and work for alternative fuels. Interestingly, the proof-of-work [PoW] cryptocurrency, Bitcoin operations were once again threatened by this event.

Bitcoin and mining in Europe

The European Union parliamentarians on Monday have voted on a draft of the proposed Markets in Crypto Assets [MiCA] framework that suggested a ban on the mining process. MiCa, EU’s legislative package for governing digital assets, in its draft mentioned limiting the use of cryptocurrencies powered by energy-intensive computing process, also known as proof-of-work [PoW]. While it was a close call, the members have not yet banned the process of mining.

As per the provisions in the bill, the crypto assets will be subjected to the EU’s “minimum environmental sustainability standards concerning their consensus mechanism used for validating transactions, before being issued, offered or admitted to trading in the Union.”

This provides cryptocurrencies like Bitcoin and Ethereum, currently traded in the EU, to shift their consensus mechanism from PoW to proof-of-stake [PoS]. Although Ethereum is currently working on this shift, it is unclear whether or not bitcoin can do it.

This idea was met with heavy backlash from the cryptocurrency community, but the EU parliamentarians have been pushing for a bank on PoW cryptos over energy concerns for a long time now. Even with renewable energy, the ministers fear it being channeled into PoW computing instead of the national grid destined for public use.

Now that the parliament has voted against the de-facto PoW ban with a good margin, it leaves space for further discussion on regulating crypto-assets. The MiCA draft will be negotiated during a trialogue between the EU Commission, Parliament, and the council.

If approved, the law will come into force within a few months and the crypto companies will be offered six months transition period to comply with the changing requirement.