December 3, 2022

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EU adopts cryptocurrency energy labelling scheme to reduce energy consumption in crypto industry

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EU adopts cryptocurrency energy labelling scheme to reduce energy consumption in crypto industry



 

EU adopts cryptocurrency energy labelling scheme to reduce energy consumption in crypto industry.

The European Union will develop an energy-efficiency label for cryptocurrencies such as bitcoin to rein in the industry’s growing electricity consumption.

According to a draft proposal to be announced on Tuesday, the European Commission will work with international partners to come up with a tiered measure that would encourage greener encryption systems such as Proof of Stake (PoS).

The EU will also call on countries to set targets for this winter on miners’ energy consumption. The EU is trying to use less Russian gas to get through the winter.

 

EU adopts cryptocurrency energy labelling scheme to reduce energy consumption in crypto industry

 

 

In the draft action plan, the EU’s executive agency said:

“While the use of cryptocurrencies has grown significantly, the energy consumption of cryptocurrencies has also increased. When utilizing cryptocurrencies and other blockchain technologies in energy markets and transactions, it is imperative to Be careful to only use the most energy-efficient version of the technology.”

 

Proof-of-work (PoW) cryptomining is a more energy-intensive system used by Bitcoin to issue new digital tokens, and although the EU accounts for only about 10% of the system, any action taken by the EU could still have global consequences A chain reaction occurs within the range.

It considered banning PoW before deciding to require crypto asset providers to disclose the energy consumption and environmental impact of the assets it chooses to list.

 

In contrast, PoS mining – now used by Ethereum – can use 99.9% less energy than PoW.

The idea is that the tagging system could encourage other cryptocurrencies to convert.

 

The EU will also publish a report assessing the industry’s climate impact by 2025, the document said, while urging member states to end tax breaks for crypto miners.

The EU will advise that countries must also be prepared to halt mining activities in the event of a power shortage.

 

The earliest blockchains such as Bitcoin and Ethereum adopted the PoW consensus mechanism to ensure the consistency of the blockchain ledger and the finality of transactions.

The full name of PoW is Proof of Work, and Chinese is Proof of Work. What is Proof of Work: Nodes on the network can quickly verify whether each other has the right to account through simple proof of work.

 

In the world of Proof of Stake (PoS), there are no mining machines. It is no longer a matter of consuming a lot of electricity to create proof of work for mining.

Instead, in PoS, coins are used to mine more coins. Coins can be compared to PoW.

The more miners who own the more coins, the higher the probability of who can mine blocks and get rewards.

 



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