Originally published in Bitcoin Fundamentals Report #189
The WEF's favorite tweet format is short text-only videos. They do not comment often on bitcoin, but when they do it's an attack of some sort. The tweet below is a perfect example.
They pick up on the recently rebranded campaign to switch bitcoin's consensus mechanism from Proof-of-work to Proof-of-stake, now being called Change the Code campaign.
Below, I pull out all the text from the video and add my reactions.
Experts have found a way to cut bitcoin's carbon footprint by 99.9%
This isn't new. Proof of Stake predate bitcoin and has never worked at scale. The breakthrough that enables a robust distributed consensus is PoW.
They say a change in the way bitcoin is coded could virtually eliminate its environmental impact
Is that a good thing or a bad thing? We cannot concede that bitcoin's environmental impact is negative. Bitcoin makes the whole economy more efficient, including eliminating waste from financial infrastructure, regulatory infrastructure and energy production.
The world's most popular cryptocurrency uses more energy than Denmark
Bitcoin is more than the "most popular". It is the only viable distributed consensus. The term cryptocurrency is a blanket term to falsely compare contradictory things. Nothing is like bitcoin.
All the criticism about bitcoin's energy usage centers around naïve gross numbers, instead of looking at net numbers.
Bitcoin alone could help push global warming above 2°C, if it becomes widely adopted
2D analysis. Bitcoin increases the efficiency of the entire market, decreases waste and corruption, and opens the way to massive innovation in energy and technology. We cannot concede that Bitcoin is a negative on the climate. In fact, Bitcoin will lower unsustainable human affects on the climate on net.
Bitcoin's huge energy demands stem from the way its transactions are verified
Not really, transactions are verified by all nodes regardless of mining. Nodes even verify the miners' work. Proof of Work (mining) is essential for picking who orders those transactions into blocks in a decentralized way. Mining enables bitcoin to not have a rule-keeper since all nodes only obey something that cannot be faked, proof of work.
Powerful computers compete to solve complex math problems, in a process called 'mining'
The winner is reward with bitcoin
The price of bitcoin has soared in recent years
This has incentivized miners to buy more and more powerful computers that consume increasing amounts of energy to run and cool
This one is provably false. As miners get more powerful, they get more efficient not less. Each computation is done more efficiently through time. Early mining was horribly inefficient.
The reason energy consumption by miners has risen as a gross number is because it's profitable. Period. The market values this use of energy more than other uses. Bitcoin, being a new technology, also unlocks previously unusable energy, like distant hydro and gas flaring in oil fields.
A new campaign, Change the Code, says this doesn't have to be the case
This tagline is new, but the campaign is a repeat of previous attempts to subvert bitcoin
And instead of using computers to crunch numbers miners could stake their own bitcoins to verify transactions instead
They can, but...
Eliminating most of the network's energy demands at a stroke
What they cannot do is eliminate the PoW version of bitcoin. The choice is not between Proof of work or proof of stake, it is between PoW or PoW+PoS. You cannot stop the network from continuing to function as it is, all they can do is create an perverted version (altcoin) that must compete.
The campaigners say this could be achieved with a basic change in coding, along with the buy-in of around 30 key figures in the bitcoin universe
Misunderstanding of how bitcoin consensus and verification works.
Rival cryptocurrency company Ethereum has pledged to switch to this approach, which it says is 2000 times more energy-efficient than mining
Yep, Ethereum is a company and they have not yet been able to shift to PoS. Not so easy. "Rival" is a bit much. Is a pink sheet stock a rival to gold?
Nothing is a substitute for PoW. Everything else can be faked or gamed. Proof-of-stake specifically suffers from being unmoored from concrete restraints. In other words, all limitations in PoS, that are supposed to keep people from cheating or crashing the consensus, are relative to other variables. Where PoW cannot be faked because it requires energy to be consumed in the real world, PoS has no concrete restraints on cheating.
The PoS crowd will respond to that by saying they've manufactured some restraints, like "slashing" in ethereum's scheme. Apart from being conceited (central planners always are), it is only another relative constraint, not a real world one. Adding more and more relative restraints has diminishing marginal returns on security, and eventually turns negative due to overcomplexity.
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