EU establishes energy efficiency label for cryptocurrencies in an effort to encourage PoS use – report

In an effort to mitigate the growing use of energy in the crypto space, the European Union will develop an energy efficiency label for cryptocurrencies such as bitcoin (BTC-USD), Bloomberg reported, citing a draft suggestions will be released later on Tuesday.

In collaboration with international partners, the European Commission will create a labeling system that will incentivize cryptocurrencies to switch to more eco-friendly mechanisms such as Proof-of-Stake, of ethereum (ETH-USD) blockchain adopted in mid-September through its Consolidation.

The use of the energy-intensive Proof-of-Work system, used by bitcoin (BTC-USD), has faced regulatory scrutiny globally, especially as a range of developed countries focus on low-carbon transitions. Note, PoS uses almost 100% less power than PoW.

“Just as their use has increased significantly, so has the energy consumption of cryptocurrencies,” the EU executive body said in the draft, cited by Bloomberg. “In exploring the use of cryptocurrencies and other blockchain technologies in energy and trading markets, care must be taken to use only the most efficient versions of the technology.”

The document further reveals that the block will issue a report assessing the climate impact of the crypto industry by 2025. In addition, countries should be ready to stop mining operations in the event of a power shortage, in a move that could make miners want to move to crypto hubs like the United Arab Emirates or the United States

In March, the crypto community won after the EU Parliamentary committee Reject PoW Ban.