Elon Musk and Microstrategy CEO Michael Saylor have come under fire after announcing the formation of a Bitcoin Mining Council to promote sustainability initiatives. The Bitcoin Mining Council is the result of a meeting between North American Bitcoin miners who have committed to publishing the details of their renewable energy usage. Participants include Galaxy Digital, Marathon Digital Holdings, and Argo.
Bitcoin proponents have spent years debunking criticisms of the electricity consumed by proof-of-work hash generation. Miners already seek out low-cost energy sources to increase profit margins, with hydroelectric energy the most common energy source for Bitcoin mining. There are miners who do draw energy from coal-fired power plants, but as CasaHODL CTO Jameson Lopp explains, “Incentives drive miners to use cheap stranded / renewable energy.”
Even though a lot of bitcoin mining is already fueled by renewable energy, the formation of a Bitcoin Mining Council is troubling to many longtime bitcoin HODLers. For one thing, mining centralization has long been a concern. Elon Musk brought it up himself last week, saying that Bitcoin is “highly centralized, with supermajority controlled by handful of big mining (aka hashing) companies.”
It seems that Musk is taking capitalizing on centralization, and many have compared the Mining Council to a cartel. As Mir Liponi points out, “Centralization of #bitcoin at closed doors is something bitcoiners don’t really like.” The announcement drew comparisons to the New York Agreement, an ill-conceived proposal to increase Bitcoin’s block size through an incompatible a protocol change known as Segwit2x. The hard fork efforts were abandoned after community pushback.
It is possible that the Mining Council is an attempt to quell FUD surrounding environmental concerns in order to make Bitcoin a more attractive investment. Elon Musk previously announced that Tesla would stop accepting bitcoin for car sales due to concerns over fossil fuel use for mining.
The Bitcoin Mining Council should not have any influence over Bitcoin as long as users run their own full nodes. After calling the Council a cartel, Litecoin founder Charlie Lee tweeted: “Bitcoin is designed to stay decentralized. If anything bad (fees fixing, AML, censorship, etc.) comes out of this, Bitcoin’s immune system will fight and defeat it.”