Bitcoin's hash rate is continuing to rise, and heightened demand for energy in this industry is coinciding with fears that parts of Europe could suffer blackouts during the colder months.
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EU countries must be prepared to stop crypto mining this winter as the continent faces an energy crisis, the European Commission has warned.
In a new report, officials in Brussels note that the energy usage linked to digital assets has doubled compared with two years ago — reaching 0.4% of global consumption.
"Care must be taken to use only the most energy-efficient versions of the technology," the document warns.
Criticism is reserved for cryptocurrencies like Bitcoin that rely on a Proof-of-Work consensus mechanism — with this technology described as "relatively outdated."
At this point, Bitcoin's proponents would argue that PoW is crucial for achieving decentralization — and miners are actively contributing to developments in renewable energy.
Since Ethereum made the switch to a Proof-of-Stake consensus mechanism last month, fears have been raised that transactions on this blockchain could be censored. The report adds:
"As Europe currently represents only around 10% of global Proof-of-Work mining activities, international cooperation is needed to tackle the issue of the high energy consumption of Proof-of-Work mining in a globally impactful way."
Bitcoin's hash rate is continuing to rise, and heightened demand for energy in this industry is coinciding with fears that parts of Europe could suffer blackouts during the colder months.
Russia's invasion of Ukraine has led to supplies being disrupted, especially through the Nord Stream pipeline.
EU member states are being urged "to implement targeted and proportionate measures to lower the electricity consumption of cryptoasset miners."
Longer term, the European Commission says other measures should also be considered — including ending tax breaks that benefit miners in some countries. A crucial line is this:
"In case there is a need for load shedding in the electricity systems, the member states must also be ready to stop cryptoasset mining."
From the perspective of Brussels, Ethereum's Merge is being treated as a shining example — amid estimates that the switch to PoS slashes energy consumption by 99%.
"This switch shows that the crypto world can move towards a more efficient system. But we need to go the extra mile for this to happen. To reduce energy consumption, the commission will promote 'environmentally friendly' consensus mechanisms through the European Blockchain Services Infrastructure as gold standard in Europe and the world."
Just some of the measures being proposed include the development of an energy efficiency label for blockchains.
