ECB report compares PoW to fossil fuel cars, PoS to electric vehicles

European Central Bank researchers anticipate a clash between green transition policies and bitcoin investors.

Amid soaring inflation, the European Central Bank (ECB) has found time to sum up its concerns about the “significant carbon footprint” of Bitcoin (BTC) and other cryptocurrencies, which require a lot of computing power.

The ECB has published the report entitled "Mining the environment - is climate risk budgeted in crypto-assets?" July 12. In the report, the ECB research group reinforces the environmental narrative on the battle of protocols, where the concept of proof-of-work (PoW) poses a threat to the planet. In contrast, proof of stake (PoS) is the only sustainable crypto option, experts claim.

The article compares the amount of energy consumed by Bitcoin to the annual energy consumption of individual countries, such as Spain, the Netherlands, and Austria. It claims that the combined carbon footprint for Bitcoin and Ether (ETH) negates greenhouse gas (GHG) emissions savings for most Eurozone countries in May 2022.

Since the main reason for the high power consumption lies in the PoW consensus mechanism, the authors consider both Bitcoin and Ethereum blockchain-based tokens, including stablecoins like Tether ( USDT), as particularly unsustainable and putting the entire green transition project at risk. In July, Ethereum completed a major trial for the merger on the Sepolia testnet, bringing the platform one step closer to moving to the PoS consensus mechanism.

Related: NYC Mayor Eric Adams Speaks Out Against PoW Mining Ban Legislation

At one point, the article refines the te...