The usage of Proof-of-Work (PoW) crypto was in doubt following the draft of the European Union’s (EU) proposed legal framework
No Ban On PoW Crypto
The use of Proof-of-Work (PoW) cryptocurrencies was called into question following the publication of a draft of the European Union’s (EU) proposed regulatory framework for regulating virtual currencies, dubbed the Markets in Crypto Assets (MiCA) framework. However, on Monday, March 14, the European Parliament’s Economic and Monetary Affairs Committee voted against a ban on the Proof-of-Work algorithms that underpin popular cryptocurrencies such as Bitcoin and Ethereum.
Bitcoin and Ethereum both utilize Proof of Work (PoW), a consensus technique for confirming transactions and adding new blocks to the network. The PoW blockchain network’s participants compete concurrently to solve a cryptographic algorithm. The technique is meant to grow increasingly difficult to solve as the number of computers attempting to solve it increases, which means that a significant amount of processing power and hence energy is wasted certifying each block on a blockchain.
Quotes
“In view of the important debate about sustainability, my suggestion is to include crypto assets, like all other financial products, in the Taxonomie area,” tweeted Stefan Berger, member of the European Parliament from Germany, on Tuesday. “An independent discussion of the Proof-of-Work is no longer planned in MiCA.”
Patrick Hansen, Unstoppable Finance’s head of growth, added: “Since there is no way bitcoin can and will implement a rollout plan out of PoW, it would affect bitcoin as well.”
The somewhat more crypto-friendly language in the latest version of MiCA, which is expected to pass out of committee, is a significant improvement over the original text, which Hansen previously condemned as a “suicidal proposition” as Hansen said: “It would kill the entire European crypto industry, the one sector that fully aligns with the European values and where the EU could actually be competitive.”
