EU policymakers are mulling major changes the region’s crypto framework and may vote on environmental standards that could effectively ban some digital currencies from trading within the bloc.
Bitcoin prices edged higher Monday ahead of a key vote by European lawmakers on new regulatory framework for crypto assets that some see as the first step towards an all-out ban on digital coins in the world’s biggest economic bloc.
The European Union’s Economic and Monetary Affairs Committee is set to vote on a policy recommendation known as MiCa, which would demand “minimum environmental sustainability standards” for crypto assets traded in the bloc.
The rule change, if ultimately adopted, would mean “proof of work” crypto assets, such as bitcoin and Ethereum, would be likely be unable to demonstrate their alignment, given the ever-increasing computing power required to validate each transaction on the blockchain.
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A 2021 report from Bank of America noted that the CO2 emissions required to “mine” each transaction are at similar levels to that of Greece, a top fifty global economy, at around 60 tons, adding that an inflow of $1 billion in new bitcoin investment is the equivalent of 1.2mn internal combustion engine cars.
“As hash power today is mostly in coal-fired Xinjiang, a link between prices, energy demand & CO2 means Bitcoin is tied to Chinese coal. Should prices rise to $1 million, Bitcoin may turn into the world’s 5th largest emitter, surpassing Japan,” BofA said.
Bitcoin prices were given a boost, however, from comments made on the verified Twitter account of Tesla (TSLA) – Get Tesla Inc Report CEO Elon Musk, who told his 77.6 million followers that “I still own & won’t sell my Bitcoin, Ethereum or Doge fwiw”, given his concerns for rising inflation and weakening currencies.
Musk noted that both Tesla and SpaceX were seeing significant price increases in raw materials and logistics as a result of the recent ramp in global commodity prices, which he linked to the ongoing war between Russia and Ukraine.
“As a general principle, for those looking for advice from this thread, it is generally better to own physical things like a home or stock in companies you think make good products, than dollars when inflation is high,” Musk said.
Bitcoin prices were last seen 0.25% higher on the Monday session and changing hands at $39,032.10 each.
Tesla shares, meanwhile, were marked 0.58% higher in pre-market trading to indicate a Monday opening bell price of $800.00 each, although that would still leave the stock facing a year-to-date decline of around 33.3%.
