[bitcoin-dev] Reducing block reward via soft fork

[ZmnSCPxj]

Good morning James,

> Background
> ===
> Reducing the block reward reduces the incentive to mine. It reduces the maximum 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 energy use again.
The only difference is that the security is paid for directly by transactors 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 entropy-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 producing entropy and dumping it into our surroundings.

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

The trope that the "free market" is somehow opposed to "environmentalism" is 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 pollution, 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 --- Bitcoin is the most honest currency in accounting for its energy usage and consumption, and I suspect most other currencies have far worse efficiencies, that 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 world government is a major polluter, willing to pay for high fuel costs just to ship their soldiers globally, polluting the environments of foreign countries), and should be what true environmentalists would work towards, not rejecting Bitcoin as an environmental disaster (which is frankly laughable).
Remember, the free market only works correctly if all its costs are accounted correctly --- otherwise it will treat costs subsidized by the community of human beings as a resource to pump.

> Alternatives
> ===
> Instead of outright rejecting transactions (and the blocks that contain them) 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 inferior to a simple acceleration of block subsidy reduction.

Regards,
ZmnSCPXj