Cryptocurrencies remain allowed in Europe

The EU Parliament voted against a Bitcoin ban in Europe.

The Greens, the Social Democrats and the Left have failed at EU level in their plan to ban energy-hungry cryptocurrencies in Europe. The Economic Affairs Committee this week voted against an indirect Bitcoin ban by a majority. 32 MPs opposed a ban, 24 voted in favor and 3 MPs abstained.

Bitcoin mining is too energy hungry

A few weeks ago, a compromise proposal by the Committee on Economic and Monetary Affairs (ECON) became public, calling for a ban on non-ecological crypto services from January 1, 2025. The stumbling block was unsustainable consensus mechanisms like Bitcoin.

In the case of cryptocurrencies, the consensus mechanism is the procedure that is intended to guarantee that all participants in the blockchain have a uniform data status. In order to achieve this, a lot of computing effort is required, which in turn leads to high energy consumption. For this reason, the consensus mechanism in cryptocurrencies like Bitcoin is considered non-green and non-sustainable.

Proof-of-work mechanism targeted by environmentalists

The initially planned ban would have hit cryptocurrencies that still rely on the older proof-of-work mechanism. These include Bitcoin and Ether. The less energy-intensive proof-of-stake mechanism would still have been allowed. The cryptocurrency Cardano-Coin Ada relies on this. Additional coins are not released here by additional computing power as in Bitcoin mining, but by validators in the network.

In the future, cryptocurrencies with a proof-of-work mechanism are to be included in the EU taxonomy. The EU regulations evaluate how ecologically a company operates. Further details about the plans are not yet known.

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