With what is happening in New York State, US, where they are about to ban Proof-of-Work (PoW) based Bitcoin mining, how likely is it that something similar could happen in Europe?
Does Bitcoin in Europe have the same fate as in the US?
There are two important details to highlight in order to understand what the real risks are.
The first is that the state of New York is not going to ban PoW-based mining altogether, but instead is going to impose a “full review” of the overall environmental impact for mining farms that mine PoW-based cryptocurrencies such as Bitcoin.
This would not be a total ban, but a ban on operations for all miners who cannot demonstrate that they have an environmental impact below a certain threshold.
It is worth noting, however, that anyone who buys electricity from external suppliers may find it so difficult to prove that they are using clean energy that they may have to give up mining.
It is possible that a similar reasoning will be followed in Europe as well, since the only real big problem with PoW is energy consumption from polluting sources in particular.
The second detail is that in this case the discussion does not concern the whole of Europe, but only the 27 member states of the European Union.
In fact, the possible ban on mining is linked to specific EU regulatory decisions.
European regulations on Bitcoin mining
To tell the truth, the first attempts by the EU to do so seem to have failed, so much so that there is currently no ban, and there is also no draft law ready to be approved in this sense.
However, especially after what is happening in the State of New York, it seems likely that sooner or later the EU will also manage to pass some similar legislation.
It is worth noting that there are a number of Bitcoin mining farms within the borders of New York State that use electricity generated internally from renewable sources, so even in the event of a ban, these mining farms would most likely continue to operate. Something similar could happen in the EU, where for example there are already a number of mining farms that use self-generated hydropower, or purchased exclusively from certified producers.
Thus, a total ban is unlikely. Moreover, the ban will only affect mining activities, which will be carried out elsewhere.
News about the ban
There are two false reports that are circulating a lot, especially on the Internet, about this possible ban.
The first one claims that the energy consumption of Bitcoin mining is increasing and will continue to increase.
Instead, since December last year, the increase seems to have stopped, at least for now. Moreover, with the reward for miners being halved every four years, consumption is bound to fall sooner or later, as this depends on the very size of the miner’s income, of which the reward is by far the largest slice.
The second is that a ban could in fact force Bitcoin to also switch to Proof-of-Stake.
This news is completely false for three reasons.
The first one is that as of today it is practically impossible to change the Bitcoin protocol so much as to replace PoW with PoS. So the risk of such a substitution is practically non-existent.
The second is that the ban refers to mining activity, and not to the exchange or payment in BTC. So it does not apply to the Bitcoin protocol, but only to miners.
The third is that if PoW mining is banned in one area, miners will move to other areas, as happened last year to Chinese miners who moved to Kazakhstan, or even to the US itself.
In fact, while New York State is banning PoW mining, Texas is happily welcoming many Bitcoin miners.
So not only will Bitcoin remain based on PoW, but Bitcoin mining itself will continue, with miners simply moving from places where they are not allowed to do so, to other places where they are welcome.