Europe is currently in one of its most challenging periods with the escalation of the war between Russia and Ukraine, which has driven the region into a biting energy crisis. As a result, the European Union (EU) plans to wean itself off Russian oil and transform the bloc’s energy sector.
EU Proposes Digital Energy System
Russia has been the largest energy supplier to the EU bloc for centuries, but things are about to change. Following Russia’s invasion of Ukraine, the EU, alongside its allies, placed a heavy economic embargo on the country. In response, Russia halted its energy supply to the rest of Europe, plunging the region into its worst energy crisis.
Due to the high energy demand and low supply occasioned by increasing prices, the Commission proposes digitalizing the energy sector. Accordingly, this is to help consumers save more from high energy bills.
Moreover, introducing smart buildings, smart meters, and internet of things (IoT) devices will allow users to monitor their energy consumption and increase the integration of renewable energy alongside other cost-saving measures.
Meanwhile, the Commission pursues its commitment through legislative processes, investment, and collaborations with member states. The short-term goal is to leverage digitalization to ensure seamless interaction between the various parties. In addition, energy consumers can also gain from domestic energy sources like solar and wind turbines.
In the long run, digitalization will pave the way for integrating decentralized renewable energy sources into the grid. This will make the EU less reliant on imported fossil-based energy and less prone to price instability. However, this can only become possible if the digital equipment and other data infrastructures for supplying power to all parts are in place and widespread.
Will the Action Plan Impact Cryptocurrency?
Considering how the energy consumption of crypto mining has made headlines over the past few years, the latest move by the EU will likely affect the industry. Furthermore, the energy demand for cryptocurrency has jumped by almost 900% over the past five years, representing 0.4% of global electricity consumption.
Accordingly, the EU will develop a comprehensive report by 2025 highlighting the environmental and climate impact of emerging technologies like digital assets. Moreover, the information will also include measures on how to mitigate the adverse effects of crypto mining on the environment.
With the current energy crisis and the risks associated with winter, the Commission has called on member nations to implement targeted measures to reduce the electricity consumption of crypto asset enterprises in line with the new Council Regulations on emergency intervention.
As a result, the Commission recommended load shedding in the electricity distribution, with member states told to halt further crypto mining. From a broad perspective and in the long term, the EU would cease issuing tax breaks and other fiscal incentives to digital asset miners, which are currently in force in some jurisdictions.
The Commission sought international collaborations to develop more technical expertise from regulatory bodies to create an energy-efficient mining system for the blockchain industry. Therefore, crypto miners operating in the bloc will brace for tough times.