According to Mariya Gabriel, a member of the European Commission for Digital Economy and Social Affairs, the European Commission has confirmed that it is concerned about the problems associated with rising electricity consumption caused by cryptocurrency mining.
According to the notice on the official website of the European Parliament, Gabriel responded to this question submitted to the Parliament.
Electricity consumption is growing
Gabriel pointed out that the EU Digital Economy and Social Committee has realized that the increasing power consumption of cryptocurrency and blockchain technology as a whole has raised concerns for social development.
This problem is especially important in bitcoin mining because bitcoin mining activities are concentrated in China. Although two-thirds of the mining activities are carried out in China, according to some forecasts, mining activities in other areas have increased.
The statement states that there is currently no legal basis to prohibit or limit energy consumption within the EU. But given that electricity consumption is an economic activity, it is governed by EU regulations that apply to energy efficiency, the electricity industry, and greenhouse gas emissions. The EU ETS covers greenhouse gas emissions from the power sector.
The statement pointed out that cryptocurrency mining can bring high valuations to cryptocurrencies. Increasing power consumption and costs may increase the value of cryptocurrencies and slow down growing market demand.
Mining is legal
The committee did not take any means to track cryptocurrency mining activities because it was not illegal. However, the committee will review the impact of the activity on energy demand.
Gabriel's statement further points out that many promising applications of blockchain technology do not have a huge demand for electricity, which is critical.
In January, Christine Lagarde, president of the International Monetary Fund (IMF), said at the World Economic Forum that Bitcoin mining is too energy intensive. Many analysts and environmentalists have warned about the industry's electricity usage. It also said that bitcoin mining has become a "big problem" considering that the world is responding to climate change.
Exploring blockchain technology
The European Commission announced last year a plan to establish an EU blockchain observatory in response to the European Parliament's vision of strengthening its technical expertise and regulatory capabilities. The project will include an observatory and a forum to collect relevant data on distributed ledger technology and blockchain technology. The goal is to build knowledge resources for forward-looking blockchain themes and develop use cases within the EU.
Another goal is to assist the European Community (EC) in determining the role of government agencies in encouraging such innovative technologies and the development of relevant policies.