Sweden and Hungary are spearheading the charge in the European Union for a prohibition on the crypto mining of digital currencies.
One major issue is that energy-intensive mining uses renewable energy that the general population could utilize. This is particularly problematic since the European Union is at a time when it is experiencing an energy crisis and electricity rates are increasing in several member nations.
Mining, or making new currencies, typically necessitates a strong graphics processing unit (GPU) or specialized equipment, as well as powerful cooling devices, therefore requiring a lot of electricity.
As per The New York Times, bitcoin mining consumes approximately 91 terawatt-hours of electricity each year or nearly 0.5 percent of all power usage globally.
To give these values some context, that amount of power would be sufficient to run Finland, a European nation of 5.5 million people.
Admittedly, this figure covers mining all over the world, not just on European territory. Nevertheless, the value is still considerable.
EU Regulator Proposal
Multiple nations, along with Sweden and Hungary, are pressing for a cryptocurrency mining ban. Soon to be implemented across the entire 27 European Union’s member nations. Nevertheless, the explanations for why these nations want the ban vary considerably. Sweden’s argument is based on its concern about the amount of power consumption crypto mining consumes. On the other hand, Hungary says it wants to combat unlawful activities that are facilitated by cryptocurrencies.
Germany, Spain, and Norway are all in favour of a ban. This comes after a request by Russia’s central bank to outlaw cryptocurrency in the country. Although Russia did not enact the ban, Russia strengthened some laws as part of a proposal to recognize virtual currencies as cash.
We may see a similar trend and new rules in the EU, given there are no indicators that it would enact a complete crypto mining ban.
EU Members Not a Major Player
In principle, reduced mining may make Bitcoin (BTC) and other cryptocurrencies scarcer, causing prices to rise. However, this is only one of several factors influencing costs.
In August 2021, the combined mining output of EU member states was less than 10%. As per the Cambridge University mining map, the percentage is probably overstated. This is because of miners’ usage of virtual private networks (VPNs) and proxy servers.
Recall what transpired after China, which accounted for 34% of global Bitcoin mining at the time, stopped crypto mining. Bitcoin’s value fell for a spell after that. However, it eventually reached an all-time high in November 2021. Miners just relocated to nations with less expensive and more abundant electricity and continued mining.
Prohibiting crypto mining across the EU will have little long-term influence on crypto pricing.
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