The European Union (EU) plans to design a metric that would rate cryptos according to their energy efficiency to promote the most sustainable types of crypto mining.
EU crypto range to boost proof-of-stake model
According to the European Commission (EC), the amount of energy that cryptocurrencies are consuming has grown much higher than the adoption of cryptos by the wider audience.
Therefore, the EC will focus on creating an EU crypto range framework through which it can boost “the most energy-efficient versions of the technology” and set up a standard to analyse how much energy is spent to create different cryptocurrencies.
The current proof-of-work method Bitcoin is using consumes high amounts of energy. The method uses competitive validation to confirm transactions and add new blocks to the blockchain. Since proof-of-work, first uses mining to achieve those goals, it is more expensive and acquires more time. Proof-of-stake uses staking to achieve the same things and offers critical advantages such as faster transaction speeds and more efficient energy requirements. Therefore, it has been recently adopted by the second-largest crypto Ethereum. Its energy use drop fell by 99.9 percent.
It’s because of proof-of-work that the EU almost decided to ban all mining activities even though EU countries contribute only 10 percent to the total.
Dubbed Markets in Crypto Assets (MiCA) legislation, this could be one of the most comprehensive regulatory frameworks for cryptocurrencies ever.
EU might recommend mining halt
The European Union also promised to make a report on the overall climate impact of cryptocurrency and said one should be released by 2025 at the latest.
Another problem is rising fuel costs on the whole continent due to the Russia-Ukraine conflict. The Union said that if the rise in electricity prices continues, it will recommend that all members halt their mining operations.
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