EU expensing $843k to pull back the curtain on crypto’s climate impact

The bloc aims to explore the possibility of setting sustainability standards for crypto assets, potentially guiding future financial regulations in the sector

article-image

Bogdan Irofte/Shutterstock modified by Blockworks

share

The European Union wants to figure out how crypto asset networks might be affecting climate change and reduce their impact.

On Tuesday, the bloc released a notice showing intent to engage an institution to create a methodology aimed at reducing the environmental effects, as needed.

“There is evidence that crypto-assets can cause significant harm on the climate and environment and generate negative economic and social externalities, depending on the consensus mechanism used to validate transactions,” a contract notice showed, without specifying which assets.

The note expressed concerns that growing interest in crypto and the expansion of mining activities, even within the EU, might jeopardize the EU’s efforts to meet its climate and sustainability objectives to align with the Paris Agreement.

“The action aims at enhancing the EU capacity to assess and mitigate the impact of crypto-mining and develop specific sustainability standards,” it said.

Consequently, the study’s findings may impact prospective policies aimed at establishing environmental sustainability criteria for crypto assets.

The EU will earmark about 800,000 euros (~$843,000) for commissioning this study, which is expected to last 13 months.

The deadline for submitting tenders or requests to participate is set for Nov. 10.

Proof-of-work vs. proof-of-stake 

Bitcoin relies on a proof-of-work mechanism, which necessarily expends energy to solve computational puzzles.

Cryptocurrencies, particularly Bitcoin, often face criticism for their perceived high energy consumption, leading to concerns about environmental impact and resource usage.

Most crypto assets, such as Ethereum, employ a proof-of-stake system where validators secure the network by staking assets as collateral. This alternative approach drastically lowers energy consumption compared to Bitcoin, although there are tradeoffs.

For instance, Ethereum previously relied on proof-of-work in its consensus design, but following the Merge in September 2022, the network instantly reduced its energy consumption by 99.95%.

But the true environmental effects of crypto networks that still use proof-of-work remain a subject of ongoing debate, and misconceptions are common.

For instance, according to climate tech investor Daniel Batten, bitcoin has managed to offset 6% of emissions through methane mitigation efforts. 

In contrast, other industries such as banking, gold, steel, automotive, aluminum and construction have not reported any emissions offset through methane mitigation at this time, he tweeted.

Loading Tweet..

New insights come from the recent revision of the Cambridge University Bitcoin Electricity Consumption Index (CBECI), a tool that provides daily estimations of the network’s energy requirements. 

Researchers, after revisiting this widely used index on Aug. 31, came to the realization that earlier assumptions regarding Bitcoin’s energy consumption had been overstated.

Tags

Decoding crypto and the markets. Daily, with Byron Gilliam.

Upcoming Events

Old Billingsgate

Mon - Wed, October 13 - 15, 2025

Blockworks’ Digital Asset Summit (DAS) will feature conversations between the builders, allocators, and legislators who will shape the trajectory of the digital asset ecosystem in the US and abroad.

recent research

Unlocked by Template (10).png

Research

Innovations on Aptos’ technical design through Raptr, Shardines, and Zaptos approach near-optimal latency and throughput by unlocking 100% utilization of network resources, with the capacity to settle 260k transactions per second with latencies less than 800ms. The original Move language was revamped with the launch of Move 2, supporting more expressivity in smart contract logic and a scalable ability to interact with high volume datasets. The ecosystem has benefitted from strong asset inflows, now hosting over $1.3B in stablecoins, $450M in bridged BTC, and $530M in RWAs. Activity in the Aptos ecosystem has grown notably over the past year, with monthly application revenue reaching ~$835k and monthly DEX volumes growing to over $5B, both at new all time highs.

article-image

Asset allocator says fee compression could be a challenge as Grayscale converts more crypto funds to ETFs

article-image

The Stripe-acquired firm has big plans for a streamlined, multi-wallet future

article-image

Both founders of the former crypto lender have now landed in new crypto industry roles

article-image

Bitcoin’s recent peak is a victory lap for curvers left and right

article-image

Securitize CEO Carlos Domingo says institutions are eager to get exposure to tokenization