It depends. Bluetooth a2dp profile supports SBC codec as the compatible option which is a terrible codec for the bitrate it consumes. However with compatible devices, other codecs can be used, including many lossless ones like aptX, LDAC, PCM and others. You can also use higher quality lossy codecs like mp3 and AAC.
As for what you use, AAC is good enough. It is beats, after all. There are plenty of other wireless options that are lossless so if you are planning on using those,having high quality audio wouldn't be a waste. But if you're using just those headphones, then there's no need and enjoy more space for music.