EU Crypto Regulation to Save Energy

The European Union has released a set of documents relating to an EU crypto regulation action plan for implementing the European Green Deal and the REPowerEU Plan. Both are intended to save energy by digitising the energy sector. It shows that crypto miners are on the radar of European energy planners.

The REPowerEU plan

The REPowerEU Plan was unveiled in May in response to Russia's invasion of Ukraine, which significantly impacted European energy supplies. The document outlines the EU's strategy for achieving energy independence from Russian fossil fuels by 2027.

The document was a follow-up to the first 'REPowerEU' document, released on March 8, 2022, and outlined steps to avoid Europe's fuel dependence on Russia becoming a weapon against the bloc.

REPowerEU's primary goal is:

• Ending Europe's reliance on Russian fossil fuels as soon as possible, ideally by 2027, with a two-thirds reduction in Russian gas consumption by the end of 2022.

• Securing the EU energy system's long-term sustainability, cost-effectiveness, and energy supply through a controlled exit from this long-entrenched relationship with Russia.

Commission Staff Working Document

According to the document, Europe accounts for about 10% of global crypto mining, with Germany and Ireland leading the continent and Sweden seeing a significant increase in activity after mining was banned in China. The European Securities and Markets Authority is expected to draft technical standards for the crypto-mining industry.

The paper also stated that investors require more information about cryptocurrencies' energy consumption. It echoes the EUBOF document, that the EU crypto regulation should take the lead in developing international blockchain standards.

According to a communication from the Commission to bodies including the European Parliament, Council, and European Economic and Social Committee, energy consumption for cryptocurrency mining has more than doubled in the last two years. The proposed Markets in Crypto Assets (MiCA) legislation would require crypto-asset market participants to make environmental disclosures.

Meanwhile, due to the tight energy situation this winter as a result of disruptions in Russian fuel supplies, the European Commission, the EU's executive branch, is urging member states "to implement targeted and proportionate measures to lower the electricity consumption of crypto-asset miners to put an end to tax breaks and other fiscal measures benefiting crypto-miners in the longer term".