MEPs voted for a uniform legal framework for crypto-assets in the European Union. This includes, measures for consumer protection and safeguards against market manipulation and financial crime. To reduce the cryptos' carbon footprint, MEPs have asked the European Commission to include crypto-assets mining in the EU taxonomy a classification system for sustainable activities by The draft rules had 31 votes in favour to 4 and 23 abstentions.
Formal negotiations on the draft framwork will now proceed between the European commission, council and parliament. Bitcoin and Ethereum use PoW, the mechanism used to confirm transactions and add new blocks to the chain. All of the participants in the PoW blockchain network compete simultaneously to solve a cryptographic algorithm. The algorithm is designed to become more difficult to solve the more computers there are trying to solve it, which means a huge amount of computational power and therefore energy is expended validating each block in a blockchain.
Many countries such as China have banned crypto mining due to its massive energy consumption, as the country battled power cuts last year. Despite the crackdown in China, which was the top destination for crypto miners, a recent study showed Bitcoin mining actually got much dirtier and emits around the same amount of CO2 annually as a country the size of Greece.
Several EU parliamentarians have been pushing to ban PoW cryptos in favour of more sustainable energy. However, they have also raised concerns that switching to renewable energy would mean such energy is favoured for crypto mining rather than for public use. Another option could be to move to the Proof-of-Stake model, which is considered greener as it randomly allocates coins to users, who put up coins for collateral.
This content is not available in your region. It is the latest in China's national crackdown on what it sees as a volatile, speculative investment at best - and a way to launder money at worst. Trading crypto-currency has officially been banned in China since , but has continued online through foreign exchanges. However, there has been a significant crackdown this year.
In May, Chinese state intuitions warned buyers they would have no protection for continuing to trade Bitcoin and other currencies online, as government officials vowed to increase pressure on the industry. In June, it told banks and payment platforms to stop facilitating transactions and issued bans on "mining" the currencies - the trade of using powerful computers to make new coins. But Friday's announcement is the clearest indication yet that China wants to shut down crypto-currency trading in all its forms.
The statement makes clear that those who are involved in "illegal financial activities" are committing a crime and will be prosecuted. And foreign websites providing such services to Chinese citizens online is also an illegal activity, it said. The technology at the core of many crypto-currencies, including Bitcoin, relies on many distributed computers verifying and checking transactions on a giant shared ledger known as the blockchain.
As a reward, new "coins" are randomly awarded to those who take part in this work - known as crypto "mining". China, with its relatively low electricity costs and cheaper computer hardware, has long been one of the world's main centres for mining.
The activity is so popular there that gamers have sometimes blamed the industry for a global shortage of powerful graphics cards, which miners use for processing crypto-currencies. The Chinese crackdown has already hit the mining industry. Bitcoin dives as China cracks down on crypto.
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