EU officials consider enforcing proposed mining ban by banning Bitcoin transactions

European Union officials discussed banning bitcoin transactions during a debate over a proposed ban on proof-of-work mining, according to documents obtained through a Freedom of Information request.

According to a report published by German digital culture organization Netzpolitik, EU officials have even proposed a blanket ban on bitcoin transactions in order to curb its overall energy consumption.

From the perspective of the cryptocurrency community, the most worrisome comment came from a document detailing the minutes of a meeting between the European Union and Sweden's financial watchdog and environmental protection agency, in which officials proposed regulators to invest in Bitcoin. There is pressure from the community to move to a proof-of-stake (PoS) mechanism. rather than its current energy-intensive proof-of-work mechanism. An unnamed official said during the discussions:

"Ethereum started to move to PoS because of its community... If Ethereum can switch, we can legally do the same to BTC. We need to 'protect' other sustainable cryptocurrencies. We don't think it is necessary to 'secure' bit currency community."

Another spokesperson, who did not want to be named, said that the EU could reasonably ban the trading of any crypto assets using PoW algorithms.

The answer to that question was redacted in the document to protect "the ongoing decision-making process", but it draws attention to the fact that the EU is seriously considering such dramatic regulation.

Officials were largely unconcerned when discussing the potential impact of a blanket bitcoin ban on investors and retail traders, claiming that all bitcoin investors are fully aware of the downside risks.

“Participants in Bitcoin are fully aware of currency/investment risk fluctuations. (We) do not need to provide additional protections.”

The report comes as bitcoin's energy consumption continues to draw attention from environmental groups and regulators. Bitcoin mining currently consumes approximately 139 terawatt-hours (Twh) of electricity per year, according to the University of Cambridge’s Bitcoin Electricity Consumption Index. By comparison, the entire UK will only use about 265 terawatt hours of electricity in 2021, according to Statista.

In late March, Ripple co-founder Chris Larsen teamed up with Greenpeace to pressure the bitcoin community to convert its consensus mechanism to PoS, as ethereum intends to do later this year.

The European Union’s Economic and Monetary Affairs Committee recently voted against legislation to ban proof-of-work mining. However, the documents do offer some unique insight into the efforts some EU officials are willing to go to crack down on mining-related energy use.

While PoS cryptocurrencies do not appear to be affected by sweeping regulatory action anytime soon, bitcoin mining will remain a contentious issue in the EU.

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