Would EU ban on crypto mining raise Bitcoin prices?
Sweden leading the push against crypto mining based on concern it is soaking up needed renewable energy.
Sweden and Hungary are leading a push for a ban on cryptocurrency mining in the European Union.
One main concern: energy-intensive mining consumes renewable energy that could be used by the public, as the EU faces an energy crisis and electricity bills skyrocketing across many member countries.
But if the EU decides to ban crypto mining, will it affect the price of your Bitcoin and other cryptos?
Crypto mining consumes a lot of energy
The process of mining, or creating new coins, usually requires a powerful graphics processing unit (GPU) or dedicated hardware, powerful cooling and a lot of electricity.
Bitcoin mining consumes around 91 terawatt-hours of electricity annually, or roughly 0.5% of all electricity usage worldwide, according to The New York Times.
To put this into perspective, that electricity usage is enough to power Finland, a European country of 5.5 million people.
Granted, this number includes worldwide mining, not just what's done on European soil, but it's a significant number nonetheless.
EU regulator calls for crypto mining ban
Several countries, including Sweden and Hungary, are pushing for a crypto mining ban across all 27 EU member states. The two countries cite different reasons: Sweden is worried about energy use, while Hungary says it wants to prevent illegal activities through cryptocurrencies.
Germany, Spain and Norway support the idea of a ban. This follows a proposal from Russia's central bank to ban crypto in that country. The ban didn't pass, but Russia increased some regulations in a plan to treat cryptocurrencies as currency.
We may be looking at a similar development and new regulations in the EU as there are no indications yet that a full crypto mining ban will pass.
EU countries aren't a huge player in the crypto mining space
In theory, at least, less mining could make Bitcoin and other cryptos more scarce and raise prices. But that's just one of many factors that impact prices.
The overall mining contribution by EU member states in August 2021 was less than 10%. And that number is likely inflated due to the use of virtual private networks (VPNs) and proxy servers by miners, according to the Cambridge University mining map.
Consider what happened after China, which at the time did 34% of worldwide Bitcoin mining, banned crypto mining. Bitcoin's price dropped for a while after that, but it went on to make all-time highs in November 2021. Miners simply moved to countries with cheaper and abundant electricity and resumed mining.
If this is any indication of what the future holds, banning crypto mining across the EU will unlikely impact crypto prices in a meaningful way over the long term.
Kliment Dukovski owns Bitcoin as of the publishing date.