After the deputy of the Spanish political party Ciudadanos, María Muñoz, proposed a bill to make Spain a Bitcoin mining hotspot following the shutdown of the internet that caused a disruption in mining in Kazakhstan. The reaction of a group of lawyers specialized in blockchain, and in the regulation of cryptocurrencies through the web portal Confilegal.com, affirms that the high costs of energy “are a significant handicap”, and a clear regulation is necessary.
For Ricardo Plasencia, who is a partner in the regulatory area of CMS Albiñana & Suarez de Lezo, it is difficult for Spain to take the place of Kazakhstan due to “the high prices of energy in a country like Spain, and the mining of cryptocurrencies is an activity that requires a large computing capacity and, therefore, intense in energy consumption”, quoted Confilegal.
According to Plascencia’s opinion, the cryptocurrency mining activity does not constitute, ‘per se’, any risk for consumers. However, he clarified that activities such as the issuance, negotiation, exchange and custody of crypto assets can entail risks and it is therefore necessary that there be regulations that establish transparency and information requirements for the issuance and admission to trading of crypto assets.
“It would be desirable for Spain to advance in a regulatory regime that anticipates the European regulation together with a favorable tax regime, these are the levers that can make Spain lead investments in cryptoactive services,” Plascencia told Confilegal.
An issue of electricity cost
In another sense, for Joaquim Matinero, Banking-Financial & Blockchain lawyer at Rocajunyent, everything returns to the starting point. According to Martinero, every time Bitcoin plummets from 20% to 40%, “there are always doomsday predictions, proposals for bar gatherings or magical solutions, which can turn an entire global crisis situation overnight. ”.
For this jurist -confilegal related- the problems of this industry lie in two questions. “The first, the lack of specific regulation in relation to cryptocurrencies or virtual assets at the national level (waiting for the future European MiCA regulation)” and another issue is the cost of energy. In this sense, Spain is based on the ‘energy mix’ that varies depending on the demand and the distribution that is made in a public auction, known as the electricity ‘pool’”, commented Martinero.
“Although the mining activity can be carried out in Spain without any type of impediment, it is necessary to register its activity in the IAE and proceed to the corresponding taxation of the benefits, so there is no advantage whatsoever that favors the capture of large mining companies, without a solution to the legal insecurity, “he added.
According to Martinero, the rest of the countries of the European Union have a legal framework for the electrical energy market identical to that of Spain because the electrical energy market is part of the common market and electricity is a harmonized product in the Union. European, but, explains Martinero: “Due to the different tolls, taxes and the type of generation source, there are Member States with a much lower cost than Spain that would be more competitive for this type of new production model.”
In his opinion, Martinero describes as “complicated” due to a lot of political voluntarism that there is to be able to attract a new industry like this, since the crypto-mining sector -he points out- is extremely sensitive to the cost of electricity and any type of taxation that can significantly reduce their benefits or even monitor their movements, with which the reality is that Spain is a very uninteresting country for it.
“The fact of being a country rich in natural resources such as oil, gas and coal means that the cost of energy reaches $0.042/kWh, and also being geographically close to China, has consolidated Kazakhstan as the great refuge of cryptocurrency miners during 2021, until the beginning of the latest civil events in the country”, added Martinero.
The importance of legal certainty
On the other hand, for Alejandro González, counsel in the Banking & Finance department of the Madrid office of Hogan Lovells, what happened in Kazakhstan has had a clear impact on cryptocurrency mining, although he admits that he does not know to what extent this can be extrapolated to Spain.
“We do not have much detail about what is proposed as a National Cryptocurrency Strategy by Citizens, but one thing is the production of these assets and another is the regulation for their commercialization for the sake of market transparency and the protection of consumers”, commented González for Confilegal.
González explained that although it is an issue that exceeds the mere legal sphere, he is skeptical since he recognizes that to mine, computers with great computing capacity are needed that consume a lot of energy, and according to his criteria, the ‘miners’ normally install in countries where the price of it is cheap. “I don’t think the necessary elements are present in the Spanish ecosystem for this activity to take place on a large scale,” he said.
For this jurist, the other area, in addition to electricity, is purely legal regulation: “There I think there is unanimity in the Spanish market that it should be a priority for our legislator to create an environment of legal security that supports innovation and that At the same time, it has adequate levels of protection for consumers and investors, but we have not yet seen how cryptocurrency mining can fit into that environment,” he stressed.
In this way, says González, Spain could be placed as a benchmark for innovation. “Knowing that the margin that each of the local legislators will have will be limited by the regulations of the European sphere”, he concluded.
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