The European Securities and Markets Authority (ESMA) is calling for a ban on energy intensive “proof-of-work” cryptocurrency mining.
The regulator, which governs financial markets, says that the European Union should push the cryptocurrency industry towards the less energy-intensive “proof-of-stake” mining, which some digital assets are already moving towards.
The proof-of-work model involves miners using scores of powerful computers to solve complex mathematical problems in order to record transactions on the blockchain and be rewarded with new coins. The world's two biggest cryptocurrencies - Bitcoin (BTC) and Ethereum (ETH) – each use a proof-of-work model.
Proof-of-stake mining is less energy intensive in that users win the right to record transactions based on how much investment, or “stake,” they have in the network. Ethereum has plans to migrate to a proof-of-stake model later this year.
The European Union does not currently account for a particularly significant share of the proof-of-work mining industry. Bitcoin mining is currently dominated by the U.S. (35.4%), Kazakhstan (18.1%) and Russia (11.23%), according to the Cambridge Centre for Alternative Finance.
However, with mining banned last year in the previously dominant China, there may be concerns among European governments that its previously small share of the mining industry could naturally grow as miners search for new homes.
