Date: Sun, 23 May 2021 11:26:59 +0000
To: James Lu <jamtlu@gmail.com>,
 Bitcoin Protocol Discussion <bitcoin-dev@lists.linuxfoundation.org>
From: ZmnSCPxj <ZmnSCPxj@protonmail.com>
Reply-To: ZmnSCPxj <ZmnSCPxj@protonmail.com>
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Subject: Re: [bitcoin-dev] Reducing block reward via soft fork
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Good morning James,

> Background
> =3D=3D=3D
> Reducing the block reward reduces the incentive to mine. It reduces the m=
aximum energy price at which mining is profitable, reducing the energy use.
>

If people want to retain previous levels of security, they can offer to pay=
 higher fees, which increases the miner reward and thereby increasing the e=
nergy use again.
The only difference is that the security is paid for directly by transactor=
s rather than slowly extracted from HODLers.

Thus, I expect that the energy use of Bitcoin will fairly closely match its=
 security usage, even with this change.

Really, though:

* The issue is not energy use.
* The issue is the energy *efficiency*.

Everything important requires energy.
What is needed is to get the most amount of work for the least amount of en=
tropy-increase.

Deleterious environmental effects (pollution, temperature rise, and so on) =
are symptoms of entropy-increase in the local universe.
These have long-term negative effects from the simple fact that we are prod=
ucing entropy and dumping it into our surroundings.

If these effects are properly charged to their instigators (e.g. carbon emi=
ssions fines), then the negative environmental effects will become economic=
 disincentives, that miners will now naturally avoid in order to increase t=
heir profitability.
This holds no matter how much block rewards are, and how much comes from th=
e block subsidy or from mining fees.

The trope that the "free market" is somehow opposed to "environmentalism" i=
s about as accurate to real life as Hollywood hacking "I can crack AES-256 =
in exactly 30 minutes".
Properly account for the entropy increase (energy usage) of all kinds of po=
llution, and the free market will naturally seek sustainable and renewable =
processes --- because that maximizes profitability in the long run.
Anyone who pushes for environmentalism but refuses to use Bitcoin should be=
 treated with suspicion of either hypocrisy or massive ignorance --- Bitcoi=
n is the most honest currency in accounting for its energy usage and consum=
ption, and I suspect most other currencies have far worse efficiencies, tha=
t happen to be hidden because they are not properly accounted for.

What is needed is to enforce that pollution be paid for by those who cause =
it --- this can require significant political influence to do (a major worl=
d government is a major polluter, willing to pay for high fuel costs just t=
o ship their soldiers globally, polluting the environments of foreign count=
ries), and should be what true environmentalists would work towards, not re=
jecting Bitcoin as an environmental disaster (which is frankly laughable).
Remember, the free market only works correctly if all its costs are account=
ed correctly --- otherwise it will treat costs subsidized by the community =
of human beings as a resource to pump.

> Alternatives
> =3D=3D=3D
> Instead of outright rejecting transactions (and the blocks that contain t=
hem) that attempt to spend increased block rewards, treat them as no-ops.

That is inefficient --- the "no-op" transactions reduce the available block=
 space for operational transactions, thus this alternative is strictly infe=
rior to a simple acceleration of block subsidy reduction.

Regards,
ZmnSCPXj