Is this the End of Bitcoin? A detailed analysis by Adv. P. M. Mishra
The year 2020 was a game-changer for cryptocurrencies. Despite the devastation caused by the worldwide Covid-19 outbreak,
Bitcoin has surpassed past price records, owing primarily to the increasing institutional demand that many in the cryptocurrency community had predicted would propel the commodity to unimaginable heights. However, we doubt if developments in the crypto industry would continue to remain positive after certain regulations would come into the picture. While the industry has been anticipating increased regulatory scrutiny, Proof-of-Work (PoW) cryptos have just recently become a concern. If recent stories are to be believed, the European Union (EU) may be on the verge of outlawing crypto mining due to energy concerns.
The proposal for a crypto mining ban throughout the European Union's 27 member states is mostly coming from Swedish regulators, who are worried that renewable energy is being exploited to mine cryptocurrencies like bitcoin rather than being routed for public use. The demand has received backing from leaders in Germany, Spain, and Norway.
What is Crypto Mining?
Crypto mining is the competitive process for a cryptocurrency that employs the proof-of-work (PoW) mechanism to verify and add new transactions to the blockchain. The miner that wins the tournament receives a portion of the cash as well as transaction fees.
How Does Crypto Mining Harm the Environment?
The power needed for the mining process, which is how new digital coins are produced, is the most visible environmental impact of cryptocurrency. While most people are familiar with Bitcoin mining, mining is used in a variety of cryptocurrencies. However, since Bitcoin's launch, it's proven increasingly difficult to create new units of money through mining. Because the currency's supply is limited to 21 million units, the more units created means fewer units are accessible to mine, and minting new ones requires more processing power. The estimated carbon footprint created by the power plants that provide electricity is a major cause of environmental concern. A single Bitcoin transaction is projected to consume 2,292.5 kilowatt-hours of electricity, which is enough to run a normal US household for nearly 78 days. There's also the problem of tangible electronic trash to consider. Mining is done via computers, graphics cards, and custom-built ASIC rigs, among other things. People are continuously updating and discarding old equipment because greater computational power gives them an edge in the battle to mine more coins, resulting in up to 30,000 tonnes of electronic garbage per year.
Therefore, a prospective ban on crypto mining, according to EU Parliament member Stefan Berger, who oversees the planned regulation package for managing crypto assets in the union, would be a death sentence for bitcoin in the EU. Markets in Crypto Assets (MiCA), the newest version of the European Union's (EU) proposed legal framework for controlling virtual currencies, still has a clause that might prohibit the usage of proof-of-work cryptocurrencies says Advocate P.M. Mishra, Managing Partner of Finjuris Counsel FZ-LLC, UAE, Finlaw Associates, India, BCH Consulting, Europe.
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