On Banning Proof-of-Work

Although China successfully banned crypto-currency mining in order to cut their high-energy consumption, Bitcoin’s electricity consumption is still more than eight times higher than Google’s and Facebook’s combined, with an additional growth of 41% Year-on-Year.

For that reason, more States plan to join the mining prohibition: according to Swedish officials, the European Union should have followed through, but EU’s MiCA rejected the proposed ban on Proof-of-Work. Instead, an energy efficient label for blockchains will be created and EU countries must be ready to block crypto mining “in case there is a need for load shedding in the electricity systems”, according to an action plan on digitalising the EU’s energy system released on 18/10/2022.

Meanwhile in the United States, New York became the first State to instate a moratorium on new carbon-based fuel-powered PoW mining operations with Senate Bill S6486D. And in Canada, British Columbia and Manitoba are pausing PoW cryptocurrency mining.

Lately, USA’s Department of the Treasury and the White House are proposing that any firm using computing resources “to mine digital assets would be subject to an excise tax equal to 30 percent of the costs of electricity used in digital assets mining” (the DAME tax).