Sustainability Transparency - MICA

The sustainability disclosure requirements under Article 66(5) of Regulation (EU) 2023/1114 on Markets in Crypto-Assets ("MiCAR") require all CASPs to provide information on climate and environmental impacts, including mandatory disclosures about the consensus mechanism’s principal adverse impacts on climate and other environmental factors.

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Types of Blockchain Consensus Mechanisms

• Proof of Work (PoW): A Proof-of-Work (PoW) consensus mechanism incentivizes miners to secure the network by publishing updates to the ledger in the form of blocks, which include newly submitted and verified transactions. Miners compete to solve cryptographic puzzles, and the first to succeed earns newly minted crypto-assets (block reward) and user-paid transaction fees. This process ensures the security and integrity of the blockchain by making data manipulation computationally expensive. As a result, misconduct, such as attempting to add invalid blocks or alter the history of the ledger, leads to wasted computational resources and opportunity costs, creating an economic penalty that discourages dishonest behavior.
• Proof of Stake (PoS): Proof-of-Stake (PoS) is a blockchain consensus mechanism for processing transactions and creating new blocks. Validators are selected randomly to create new blocks based on the amount of cryptocurrency they hold and are willing to 'stake', rather than through computational power.|Validators receive transaction fees as rewards if they act honestly; however, dishonest actions such as proposing invalid blocks can lead to a reduction of their staked assets, creating an economic penalty that discourages misconduct and ensures network integrity.
• Byzantine-Fault-Tolerant (BFT): Byzantine-Fault-Tolerant (BFT) consensus mechanisms, such as Proof of Authority (PoA), Practical Byzantine Fault Tolerance (PBFT), Byzantine Agreement (BA), or similar mechanisms, secure the network through a predefined set of validators responsible for validating transactions and adding blocks to the ledger. Unlike open networks like Proof-of-Work or Proof-of-Stake, BFT and similar mechanisms operate with known and vetted participants, often selected by a governing entity. Validators are incentivized to maintain the network’s integrity through monetary rewards or external motivations, such as institutional trust or regulatory obligations. Malicious behaviour, including submitting invalid transactions or failing to participate in consensus, can result in penalties, removal from the validator set, or other repercussions, serving both as economic and reputational deterrents to dishonest behavior. Validators reach consensus by verifying transactions and proposing blocks, and the network remains secure as long as a majority of validators act honestly.
• No Consensus Algorithm: Tokens do not have a consensus mechanism, but instead rely on the consensus mechanism of one or multiple underlying crypto-asset networks. Depending on the token design, incentive mechanisms arise from the utility, scarcity, or governance rights.

Sources and Methodologies: All data provided by the Crypto Carbon Ratings Institute (CCRI) between 2025-06-11 and 2025-06-24. All indicators are based on a set of assumptions and thus represent estimates; methodology description and overview of input data, external datasets and underlying assumptions available at: https://carbon-ratings.com/dl/whitepaper-mica-methods-2024 and https://docs.mica.api.carbon-ratings.com. CCRI does not account for any offsetting of energy consumption or other market-based mechanisms as of today. 

The data presented includes content licensed from CCRI. All rights in such data remain with CCRI. This data may not be reused or distributed without the consent of CCRI.