MicroStrategy CEO Michael Saylor is weighing in on the European Union’s cryptocurrency bill, which will attempt to ban the use of the proof-of-work (PoW) consensus algorithm used by bitcoin and ether, amid environmental concerns, calling the move “a trillion-dollar mistake.”
The EU argues PoW consensus algorithms, the underpinning mechanisms of both bitcoin and ether, are too energy intensive.
Previously, the Markets in Crypto Assets (MiCA) framework included a provision which would prohibit crypto services offering PoW tokens starting in January 2025. This proposition was later abandoned following large backlash by the industry.
According to the new draft, crypto assets “shall be subject to minimum environmental sustainability standards with respect to their consensus mechanism used for validating transactions, before being issued, offered or admitted to trading in the Union.”
If an operation is “small scale,” it’s exempt from having to meet sustainability standards. However, what qualifies as a small-scale operation is not outlined in the proposal.
The proposal goes on to state if energy-intensive assets are already in the EU before the legislation goes into effect, the organization will have to “set up and maintain a phased rollout plan to ensure compliance with such requirements” as stated in another part of the framework.
Ethereum has been working on moving the project away from the PoW consensus algorithm to proof-of-stake during its long waited Eth2.0 update to thwart excess energy consumption.
The EU will vote on the proposal on March 14 after several months of debate.
MicroStrategy’s Saylor argues that cryptocurrencies not using PoW must be classified as unregistered securities by the EU.
MicroStrategy has acquired over 125,051 Bitcoins that are worth roughly $4.8 billion at press time.