European Central Bank (ECB) hints at PoW-based crypto ban by 2025

A research bulletin published by the European Central Bank (ECB) blasted Proof-of-Work (PoW) mining as a significant climate change risk.

As expected, the report specifically mentioned Bitcoin. However, it also raised issues with Ethereum, despite its transition to a Proof-of-Stake (PoS) consensus mechanism.

Researchers compiled estimated carbon footprint data on the above tokens and evaluated whether they undermine the E.U.’s commitment to fighting climate change. It then discussed policy options, including a 2025 deadline for “potential measures.”

Bitcoin and Ethereum are identified as environmentally damaging

Using data from various sources, including the Cambridge Bitcoin Electricity Consumption Index (CBECI), researchers said Bitcoin and Ethereum mining activity combined uses more energy than individual “mid-sized countries,” such as Spain, the Netherlands, and Austria.

The data also showed that estimated annual emissions, as of May 2022, exceeded target greenhouse gas (GHG) emission savings for many Euro-zone countries.

The report acknowledged industry initiatives, such as Ethereum’s PoS transition and the Bitcoin Mining Council’s efforts to “decarbonize” and educate on the sustainable mix of energy sources used in BTC mining.

But researchers largely dismissed the last point because of unclear methodology, lack of details, and unreliable data. Moreover, although such initiatives were welcomed, the report stated they are voluntary while also pointing out a conflict of interest between energy consumption and network security.

Proof-of-Work ban coming?

The report mentioned several scenarios resulting from a potential clampdown on PoW mining. For example, considering the institutional money in Bitcoin and, to a lesser extent Ethereum, researchers said the financial sector is exposed to “transition risk.” Meaning, that the E.U’s “green transition” could affect prices, in turn, affecting institutions invested in these tokens.

It also referred…