A new report from the European Central Bank (ECB) finds that climate change may force carbon taxes on crypto transactions as well as a ban on mining proof-of-work assets like Bitcoin (BTC).
The report finds that since authorities in the EU decided to heavily regulate gasoline vehicles as a means of cutting back greenhouse gas emissions, it would also make sense for them to go after proof-of-work blockchains for the same reason.
“It is difficult to see how authorities could opt to ban petrol cars over a transition period but turn a blind eye to Bitcoin-type assets built on proof-of-work technology, with country-sized energy consumption footprints and yearly carbon emissions that currently negate most Euro area countries’ past and target greenhouse gas (GHG) savings.
To continue with the car analogy, public authorities have the choice of incentivizing the crypto version of the electric vehicle (proof-of-stake and its various blockchain consensus mechanisms) or to restrict or ban the crypto version of the fossil fuel car (proof-of-work blockchain consensus mechanisms).”
The statement says that while it’s possible for authorities to do nothing, the most likely outcome is an outright ban on mining Bitcoin and other proof-of-work crypto assets and the introduction of a carbon tax to transactions involving digital assets.
“So, while a hands-off approach by public authorities is possible, it is highly unlikely, and policy action by authorities (e.g. disclosure requirements, carbon tax on crypto transactions or holdings, or outright bans on mining is probable.”
The report also says that the prices of virtual assets may be affected by such policies.
“The price impact on the crypto assets targeted by policy action is likely to be commensurate with the severity of the policy action and whether it is a global or regional measure.”
Don't Miss a Beat – Subscribe to get email alerts delivered directly to your inboxFeatured Image: Shutterstock/Liu zishan