Bitcoin has come under a lot of fire lately for its high energy consumption rate. Although there have been comments on the subject before now, it didn’t hit the headlines until Tesla’s CEO Elon Musk announced that his company was no longer going to accept the digital asset as a payment option.
For many, the announcement was a betrayal from Musk, seeing that his involvement in the cryptocurrency has pumped the price of Bitcoin a few months earlier. As reported by BTC PEERS, several members of the crypto community on Twitter took to the social media platform to bash Musk.
In a bid to save face or probably due to his genuine interest in Bitcoin, Musk revealed on Monday that he was taking steps to encourage the use of renewable energy for Bitcoin mining activities.
Musk met with North American Bitcoin miners and claims that the group is committed to publishing a plan that involved the use of renewable energy for Bitcoin mining.
Meanwhile, MicroStrategy CEO Michael Saylor disclosed that he convened the meeting. He tweeted that Bitcoin miners based in North America have agreed to form a “Bitcoin Mining Council,” which according to Saylor would promote transparency to "accelerate sustainability initiatives worldwide."
Saylor further revealed that executives from Argo, Core Scientific, Block Cap, Galaxy Digital, Hut8, Hive, Riot, and Marathon were present at the discussion. The companies have “decided to establish an organization to standardize energy reporting, pursue industry ESG goals, & educate+grow the marketplace.”
A switch to renewable energy?
Following growing energy concerns about Bitcoin’s energy usage, some countries have taken steps to halt mining activities. In early May, Democrat senator Kevin S. Parker proposed a bill to ban cryptocurrency mining for three years in New York. The bill is geared towards reducing the effects of fossil-fuel-backed crypto mining on the environment. Similarly, Chinese regulators have hinted at a possible ban on Bitcoin mining and trading activities, a revelation that sent shockwaves across the entire crypto space.
In the case of China, miners are already mapping out their exit strategy or selling off their mining rigs. And this could spell another free fall for Bitcoin prices since China accounted for more than 75% of Bitcoin mining as of April 2020. The report also estimates that about 40% of China’s Bitcoin mines run on coal.
Looking at the real economics of Bitcoin mining, one should not expect a sudden shift to renewable energy sources. For one, miners will naturally seek the cheapest available option since the goal is to maximize profit. This may be coal-driven power stations in China or hydroelectricity in the United States. A clampdown on Bitcoin mining by the government of one country will likely push miners to other crypto-friendly regions. And on a broader scale, the green mining narrative may become uneconomic or irrelevant.