The European Union is set to develop an energy efficiency label for blockchains.
The European Commission has introduced these measures as part of broader plans to control the ICT sector’s energy consumption, including an environmental labeling scheme for data centers, an energy label for computers, and measures to make it clearer how much energy telecom services use.
“The goal is to make our energy system more efficient and ready for an increasing share of renewable energy sources“, said Kadri Simson, Energy Commissioner. “For this, we need more innovative digital solutions and a much smarter and more interactive grid than we have today.“
It will provide financial support for research on digital technologies in the energy sector through a variety of public sector-led programs.
He did not specifically mention whether any of that support would make its way to the crypto sector.
Until now, it could be said that the European Union has taken a fairly permissive attitude towards crypto-currency mining, at least compared to regions like China that have issued outright bans.
In March 2022, the European Parliament’s Committee on Economic and Monetary Affairs rejected efforts to ban crypto-currency mining.”proof-of-work” (PoW) in the region, removing the offending paragraph from the Cryptographic Assets Markets Act (MiCA) bill before it was voted on.
But this isn’t the first environmentally-focused piece of crypto-currency legislation the EU is about to enact either.
The Crypto Asset Markets Regulation (MiCA), which is set to go into effect at the end of 2023, will require certain market players to disclose their environmental and climate footprints.
Regulators surround crypto-currency mining
EU regulators aren’t the only ones taking a closer look at crypto mining, it’s an issue that’s getting a lot of attention on the other side of the Atlantic.
Massachusetts Senator Elizabeth Warren and a group of six other U.S. lawmakers sent a letter to U.S. Senator Pablo Vegas, CEO of the Electric Reliability Council of Texas (ERCOT), highlighting concerns about crypto mining in Texas and “the impact these operations may have on climate change, energy grid stability and subsidies – ultimately paid for by retail consumers.“
The difference between the energy output of PoW and proof-of-stake (PoS) consensus mechanisms can be enormous.
After Ethereum’s transition to a proof-of-stake-based system, the system now reportedly consumes 99.99 percent less energy than before, at least according to research by the Crypto Carbon Rating Institute (CCRI), controlled by blockchain company ConsenSys.