Bitcoin faces pressure from EU carbon rules, UK banks

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The European Union’s climate policy may be unnecessarily hampering growth in the digital asset industry, according to a new study suggesting that the bloc’s higher carbon prices might be encouraging block reward miners to relocate their emissions-intensive operations elsewhere. Meanwhile, the digital asset industry faces different challenges in the neighboring United Kingdom, where a prominent bitcoin advocacy group has accused the country’s banking sector of locking out crypto.

EU carbon prices causing miner exodus

A new study, published on August 21 by Vietnamese researchers, found that higher carbon prices in the EU may be encouraging emissions-intensive block reward mining operations to abandon the region, with Russia a favored destination.

In 2005, the EU launched its Emissions Trading System (EU ETS) to reduce greenhouse gas emissions. The system operates on a “cap-and-trade” basis, meaning it sets a limit on the total amount of greenhouse gases that covered installations and operators can emit, with the cap reduced over time to drive emissions reductions.

Companies must surrender one EU allowance for every tonne of CO2-equivalent they emit, with allowances primarily auctioned. Firms can also trade allowances with one another, meaning those that reduce their emissions can sell or bank allowances they no longer need. Companies that fail to surrender sufficient allowances are subject to a penalty of €100 per ($116.5) excess tonne, adjusted for inflation, and must still surrender the missing allowances.