The new Bitcoin Mining Council has no intention of altering the cryptocurrency’s software and merely wants to promote sustainable energy practices and transparency in the industry, a founding member said.
The council, spearheaded by Tesla CEO Elon Musk and MicroStrategy CEO Michael Saylor, will respect bitcoin’s fungibility, and does not advocate discrimination between so-called clean and dirty coins, said Peter Wall, CEO of Argo Blockchain.
“We’re not talking about Bitcoin code or block size or anything related to changing the nature of Bitcoin,” said Wall, whose publicly traded company was one of a handful of mining firms that met with Saylor and Musk over the weekend. “We all love Bitcoin the way it is, as a decentralized, permissionless system.”
Further, “discussions with the group so far have been very clear that one 1 BTC is 1 BTC, and that the fungibility and essential properties of Bitcoin shouldn’t be changed,” Wall said in an interview Monday evening.
In the hours since Musk and Saylor revealed the meeting on Twitter Monday, hardened Bitcoin veterans have been comparing it to the controversial and ultimately unsuccessful New York Agreement of 2017. That closed-door gathering of startup executives was a major flashpoint in a highly acrimonious debate over how best to scale the Bitcoin network, and widely viewed as inimical to the currency’s ethos of leaderlessness.
As then, many users are questioning how a small group of companies and two charismatic figureheads can profess to lead a global community where, by design, no one is in charge.
“It's extremely concerning that this group of bitcoiners wandered into this ‘meeting’ without any sense of self-awareness,” wrote Marty Bent, co-founder of Great American Mining, in his newsletter Monday. ”Do they not recall the last time there was a closed-door meeting that involved industry stakeholders who attempted to speak on behalf of an entire industry? How did they think this would turn out? The hubris is astounding.”
Wall said such concerns are unfounded in this case.
“This isn't the start of OPEC,” he quipped. “The group is a way to get together and discuss. We are all independent, decentralized miners who have formed a voluntary group to influence the industry and each other.”
The group is not exclusive, he added, though it is still working out mechanisms for other mining operations to join. “This is an international challenge for Bitcoin and needs to be addressed on an international level.”
Bitcoin goes ESG?
The council’s formation also comes as public figures such as “Shark Tank” star Kevin O’Leary are pushing the idea that bitcoins can be “clean” or “dirty” depending on how they are mined, and that green-minded institutional investors can, and should buy only the former.
Throughout his conversation with CoinDesk, Wall said the council’s two goals were to promote disclosure of and improve energy practices. Beyond those broad objectives, the companies haven’t agreed on much else, he said.
“What we do want to do is to make sure valid ESG concerns about people mining bitcoin with coal are being addressed,” Wall said, referring to the shorthand for environmental, social and corporate governance. “At this point, It’s not going any further than that.”
When asked about the efficacy of carbon credits, he declined to speak on the council’s behalf. “We haven't gone beyond the two things I've laid out, which is energy transparency and improving sustainable mining practices.”
Pressed on how promoting mining transparency squared with protecting fungibility, Wall said the council wasn’t considering labeling which coins were mined sustainably and which ones with coal-powered equipment. The information would begin and end on the company level, he said.
“What we're saying is we need to promote energy transparency around individual miners, not necessarily about coins that are coming out from individual miners,” Wall said. The question is “what kind of energy mixes are individual miners, publicly traded miners, using, with the goal to then take that knowledge and encourage people to move more towards renewables.”
Besides Argo, the other miners in the group are Hut 8, Galaxy Digital, Riot Blockchain, Marathon, Core Scientific, Hive Blockchain and Blockcap. Combined, they control less than 10% of the global computing power on the Bitcoin network, Coin Metrics co-founder and Castle Island Ventures partner Nic Carter estimated. Notably, all of them are based in North America; much of the environmental controversy centers around China, where mining activity is concentrated and said to rely heavily on coal and fossil fuels in areas like Xinjiang and Inner Mongolia.
Fred Thiel, CEO of Las Vegas-based miner Marathon Digital Holdings, said he wasn’t on the call Sunday but broadly seconded Wall’s comments.
“It's more just an interest group that wants to get together and discuss,” Thiel said in an appearance on CoinDesk TV during Consensus 2021. “I think if you look at the ambitions of the council, you'll find that the council wants to be open to anybody who's a miner and it's really about sharing best practices.”
In other words, “nobody's trying to centralize or control anything,” he said.
In 2021, listed firms have to meet institutional investors' expectations for corporate social responsibility, Thiel pointed out. "For a publicly traded company with over a $2 billion market cap, ESG is important to our shareholders."
Saylor, the MicroStrategy CEO who claims to have organized the group, is scheduled to speak at Consensus 2021 Tuesday afternoon.
UPDATE (May 25, 15:00 UTC): Added geographic context.
UPDATE (May 25, 16:35 UTC): Added comments from Marathon Digital Holdings CEO.
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