Bitcoin Mining Council faces critics

Just a day after Elon Musk, MicroStrategy CEO Michael Saylor and other leaders in the cryptocurrency space announced the formation of the Bitcoin Mining Council, the move is already facing opposition. 

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The Bitcoin Mining Council was created after Musk earlier this month said that Tesla would stop accepting the world's largest cryptocurrency for electric vehicle purchases due to environmental concerns. Musk said the cited concerns about "rapidly increasing use of fossil fuels for Bitcoin mining and transactions, especially coal." He later noted that Bitcoin's energy usage is "insane", along with a chart showing that the digital currency's energy consumption has steadily grown since 2016. 

While Musk says he is still a proponent of digital currencies, he acknowledged that they could not come at the cost of the environment.

In addition to Saylor, the group includes executives from Argo Blockchain, Hive Blockchain, Riot Blockchain, GalaxyDigital, Hut 8 Mining, Marathon Digital Holdings, Core Scientific and Blockcap. 

Saylor said the council would "standardize energy reporting, pursue industry [Environmental, Social, and Corporate Governance] goals, [and] educate [and] grow the marketplace."

Musk added that North American Bitcoin miners were committed to publishing current and planned renewable usage and asking miners worldwide to do so.

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Following the Mining Council announcement, one user tweeted that the ESG movement is "an attack on Bitcoin" that "doesn't care about the environment or humanity, it cares about control over capital allocation and how corporations act."

"Letting ESG dictate how Bitcoin companies act will eventually lead to attempts to control how Bitcoin acts," the user added.

Another user argued that the council's efforts will "drive mining costs even higher and amount to a bigger waste of energy" and make the currency's high transaction costs even more expensive, making it less viable to use for payments. 

"Miners will continue to use the cheapest source of energy or get bankrupt losing business to miners who do," one person said. "No amount of crying, petitioning, or other political activism can change that."

In addition, one user warned that temptations to control Bitcoin are "irresistible but bound to fail."

"Energy prices are set by the free market competition among miners," they wrote. "Bitcoin needs no kings. No sustainability council."

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Cipher Mining CEO Tyler Page told FOX Business' Stuart Varney that Bitcoin mining operates much like data centers owned by Amazon or Microsoft.

"We operate a data center where we're going to plug in a bunch of those very powerful computers and we're going to spend dollars for electricity to power them," Page said. "Instead of selling that compute power to an enterprise company for dollars, what we're going to do is sell it to the Bitcoin network to provide the infrastructure to validate transactions on the network."

Page believes that addressing the cryptocurrency industry's carbon footprint and energy usage will be "a hill that Bitcoin will have to climb to be more broadly adopted." 

According to Page, Bitcoin mining is "uniquely suited" to use renewable energy.

"One of the challenges with renewables is that the wind blows and the water falls fast and the sun shines in certain places, and often those locations aren't near where large population centers are," Page explains. "What's unique about Bitcoin mining is it can be mobile and go to the sources of power."  

Approximately 6.25 new bitcoin are released about every 10 minutes when a block of transactions gets validated.

"So we will be competing with the other miners around the world to win those blocks and effectively how many you get rewarded is directly proportional to what percentage of the network total compute power you're providing," Page said. 

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The Bitcoin Mining Council comes as both China and the United States have signaled a potential regulatory crackdown coming on the cryptocurrency market. According to research published in the peer-reviewed journal Nature Communications in April, China accounts for roughly 75% of the total processing power of the Bitcoin network.

Cambridge University's Bitcoin Electricity Consumption Index reports that the digital currency annually consumes about 13.81 gigawatts per hour.  

Bitcoin is currently trading near $38,000 per coin after previously falling around $36,000 per coin Tuesday morning, according to prices tracked by Coindesk. Bitcoin's year-to-date returns are up about 29%.