Cryptocurrency: Is The Clean Money, Subject Only To Freedom, Not GovPolCorp Corruption

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Why A Bitcoin Ban In The EU Is Likely... And Stupid

https://bitcoinmagazine.com/culture/eu-will-likely-ban-bitcoin-to-no-avail



Bitcoin is under attack. It is increasingly seen as a “dirty
currency.” Elon Musk’s Tesla, Wikipedia, Greenpeace and other
organizations have stopped accepting BTC for their products or as a
means to donate money.

Musk, who is not only one of the richest but also one of the most
controversial people on this planet, has said: “Cryptocurrency is a
good idea on many levels, and we believe it has a promising future,
but this cannot come at great cost to the environment.” Ouch.

And it’s not just Musk. Politicians have also taken aim at Bitcoin.

Before the European Commission’s Markets in Crypto-Asset Regulation
(MiCA) regulation was passed, it caused quite a stir within the
Bitcoin community, especially due to the left-wing factions of the EU
Parliament that were opposed to proof of work (PoW) and the power
consumption of the Bitcoin network. In the trilogue, a version of MiCA
was finally passed that did not ban PoW or mining.

As became known in April 2022, some members of the European Parliament
(MEPs) tried to push through a ban on bitcoin mining and one on BTC
trading in the course of the draft law. Luckily, they failed.

However, the foundations for further steps have been laid. For
example, the issuers of cryptocurrencies, which we know are mostly
simply tech startups, will be obliged to deliver some kind of report
on the energy consumption and the associated carbon footprint of the
respective asset. Brokers and exchanges, in turn, must inform their
customers about these exact figures when they purchase crypto assets.

The increasing aversion to Bitcoin also gained traction through an
anti-Bitcoin Greenpeace USA campaign launched in March, which was
financed by Ripple co-founder Chris Larsen, among others.
Interestingly, Greenpeace accepted bitcoin donations between 2014 and
2021 until they were put on hold due to environmental concerns.

    FACT: #Bitcoin mining is driving millions of tons of new global
warming pollution in the US

    MYTH: Burning "waste" methane can green bitcoin

    REALITY: Burning waste gas does nothing to reduce fossil fuel
consumption and is even keeping old gas wells open
https://t.co/o4Er21GVoo
    — Greenpeace USA (@greenpeaceusa) October 17, 2022

NEARLY HALF OF THE EU PARLIAMENT DOESN’T LIKE BITCOIN

As mentioned, a mining or trading ban for Bitcoin didn’t make it into
the MiCA legislation. However, it is very unlikely that members of the
EU parliament who tried to implement this in MiCA will give up — we
can assume the contrary.

In March 2022, the economic and monetary affairs (ECON) committee in
the EU parliament voted against a ban on PoW. Thirty-two members voted
against it, 24 in favor. The topic seems to become more and more
ideologically driven, as the Social Democrats, the Greens, and the
left mostly wanted a PoW ban, whereas the Conservatives, the Liberals
and right-wing factions tended to vote against it.

    15/ Here is a detailed overview of how all the MEPs voted for the
final vote (not only single amendments, but entire draft)
pic.twitter.com/Z0i5DRI1bw
    — Patrick Hansen (@paddi_hansen) March 14, 2022

The final MiCA draft created by conservative MEP Stefan Berger
included a compromise: Instead of a ban on PoW, they agreed on
including a rating system for cryptocurrency to assess their
environmental impacts (more on that later).

In an email conversation with Politico, the Spanish Green EU
parliament member Ernest Urtasun explained:

“Creating an EU labeling system for crypto will not solve the problem
as long as crypto-mining can continue outside the Union, also driven
by EU demand… The Commission should rather focus on developing minimum
sustainability standards with a clear timeline to comply.”

And he added:

“Ethereum’s recent upgrade just showed that phasing out from
environmentally harmful protocols is actually feasible, without
causing any disruption to the network.”
THE ECB DOESN’T LIKE BITCOIN — AT ALL

While we see different opinions on Bitcoin in the European Parliament,
the signals we’re getting from the European Central Bank (ECB) are
very clear. The ECB is issuing warnings about cryptocurrencies on a
regular basis, naming their “exorbitant carbon footprint” as “grounds
for concern”.

Just recently, on November 30, 2022, the ECB published a blog post
titled “Bitcoin’s Last Stand.” In it, ECB’s Market Infrastructure And
Payments Director General Ulrich Bindseil and advisor Jürgen Schaff
argue that, “Bitcoin's conceptual design and technological
shortcomings make it questionable as a means of payment.”

According to Bindseil and Schaff, Bitcoin transactions are
“cumbersome, slow and expensive,” which they say explains why the
world’s largest cryptocurrency — created to overcome the existing
monetary and financial system — "has never been used to any
significant extent for legal real-world transactions.” Bindseil and
Schaff added that since Bitcoin is neither an effective payment system
nor a form of investment, “it should be treated as neither in
regulatory terms and thus should not be legitimized.”

While it may seem paradoxical to very vocally attack something that is
on the “road to irrelevance,” it is not the first time that the ECB
has attacked Bitcoin.

    10 years ago today, the ECB wrote in its first report on #bitcoin:
"In an extreme case, virtual currencies could have a substitution
effect on central bank money if they become widely accepted."
pic.twitter.com/aPACJlds3G
    — Tuur Demeester (@TuurDemeester) October 21, 2022

In July 2022, the ECB singled out Bitcoin in a research article and
compared proof of work to fossil fuel cars while considering proof of
stake as more akin to electric vehicles. Let’s ignore for a minute
that this doesn’t make sense and look at what it wrote in detail:

    “Public authorities should not stifle innovation, as it is a
driver of economic growth. Although the benefit for society of bitcoin
itself is doubtful, blockchain technology in principle may provide yet
unknown benefits and technological applications. Hence, authorities
could choose not to intervene with a view to supporting digital
innovation. At the same time, 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 PoW technology, with country-sized
energy consumption footprints and yearly carbon emissions that
currently negate most euro area countries’ past and target GHG saving.
This holds especially given that an alternative, less energy-intensive
blockchain technology exists.”

In general, the ECB believes it’s highly unlikely that the European
Union will not take action in terms of carbon emissions on PoW-based
assets like bitcoin. The authors of the paper argue that in their view
it’s likely that the EU will take similar steps on phasing out PoW as
they are doing with fossil fuel cars. Especially since, according to
them, an “alternative, less energy-intensive” technology like PoS
exists.

    “To continue with the car analogy, public authorities have the
choice of incentivising the crypto version of the electric vehicle
(PoS and its various blockchain consensus mechanisms) or to restrict
or ban the crypto version of the fossil fuel car (PoW blockchain
consensus mechanisms). 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
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.”

The vast majority of citizens are used to thinking of money as
something other than what it really is, and the ECB is also to blame
for this. Money is perceived as something that has value by itself,
instead of something whose value comes from the interaction between
the people who use it.

The euro is subject to both constant changes (regular inflation) and
traumatic events (devaluations, forced exchange rates, etc.), but
these are ignored or otherwise underestimated. People believe they own
it, although they can only exchange it for other things.

For how many and for what things will 100 euros be exchanged in one
year, five years or ten years? This is, in no way, up to us.

Its exchange function is constantly changing due to factors we cannot
control. The interaction between those who use it is the main factor
and, in turn, this interaction depends on economic and monetary policy
rules that few people know about.

Bitcoin escapes these rules (and this is the reason why the ECB wants
to ban it), it is just code that the ECB and the regulators are trying
to make useless. Bitcoin also and above all expresses its value
through features that are totally independent of a government’s power
and, therefore, the ECBs.
WHAT WILL HAPPEN NEXT?

In 2025, we will see a rating system for cryptocurrencies according to
their environmental impact within the European Union — think energy
labels for fridges or TVs. You can already expect that bitcoin will
get the worst classification. This step will essentially be positive
for Ethereum and bad for Bitcoin.

Source

It’s quite unlikely that such a label will scare off investors from
buying bitcoin, especially since the Bitcoin community is saying that
the Bitcoin network is not an obstacle but a solution for more green
energy.

Therefore, the Bitcoin mining industry has the incentive to become
greener: The fossil fuel analogy in the ECB paper makes no sense. The
energy mix of a PoW network like Bitcoin can come entirely from
renewable, green sources. Bitcoin can serve as a way to immediately
monetize energy, as is already happening with flared gas that would be
flared anyway. However, it’s questionable how fast and effective this
effort will be to policymakers, especially since fossil energy
companies like Exxon are now mining Bitcoin using flared gas.

The authors of the ECB paper are already implying that a higher
bitcoin price equals more energy consumption, as more miners will
participate. Destroying demand for bitcoin would hence be an effective
solution to bring down the hash rate. At least in theory.
CONCLUSION

The academic and political consensus seems to point toward something
like trying to retire the “old” PoW, and moving towards the “new” PoS
standard. Particularly since Ethereum’s recent merge, many bystanders
believe this could be a viable path for the Bitcoin network. We doubt
that and plan to elaborate on that in a future post. As we’ve seen in
different scenarios, banning Bitcoin is hard, if not impossible. The
Nigerian government tried, failed and eventually gave up, for
instance.

It will be quite a while until 2025, and with an energy crisis,
increased focus on carbon emission as well as global uncertainty
overall, the only thing we can do at this point is to expect the
unexpected.

Even if the worst-case scenario happens, and we see a Bitcoin ban of
some sort happen in the EU, we doubt that this will hold forever.
Bitcoin does not ask for permission. Bitcoin is something that
ontologically struggles to stay inside a fence. It is not an idea
derived from anarchist positions, it is an argument derived from the
inherent characteristics of the technology introduced by Satoshi
Nakamoto. The regulators work in an authorizing logic and so it is
clear that they struggle to intercept the Bitcoin phenomenon, which
functions regardless of someone else’s permission.