Re: [bitcoin-dev] Reducing block reward via soft fork

[ZmnSCPxj <ZmnSCPxj@protonmail.com>]

Good morning Karl,

> On 5/23/21, ZmnSCPxj via bitcoin-dev
> bitcoin-dev@lists.linuxfoundation.org wrote:
>
> > 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 turn-around time for that takes a population of both users and
> miners to cause. Increasing popularity of bitcoin has a far bigger
> impact here, and it is already raising fees and energy use at an
> established rate.
>
> If it becomes an issue, as bandwidth increases block size could be
> raised to lower fees.
>

Which increases block rewards somewhat (at least to some level that matches the overall security of the network) and you still have the same amount of energy consumed.

> > 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.
>
> There is little economic incentive to fine carbon emissions because
> there is no well-established quick path to gain profit from reducing
> them. The feedback paths you describe take decades if not hundreds of
> years.
>
> But it sounds like you are saying you would rather the energy issue
> stay a political one that does not involve bitcoin. Your point is
> quite relevant because bitcoin is not the largest consumer of energy;
> those who care about reducing energy use would be better put to look
> at other concerns.

Precisely.

> > 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.
>
> It sounds like you would prefer a proof-of-work function that directly
> proved carbon offsetting? And an on-chain tax for environmental harm?


The problem is that the only proof of efficiency here is implicit: any inefficiency will eventually be rooted out of the network, as any inefficiency will translate to reduced profitability.
However, at short-term, a miner can pollute its locality, and then exit the business and leave its crap lying around for others to deal with and abscond with pure profit.
This translates to a theft in the profitability of others in the locality.

How to prove this is not happening?
The best you can do is to have some number of authorities sign off on whether or not they are doing this.
The problem is that authorities are bribeable.

Alternately, other entities in the locality can use force to require the polluting entity to clean up or suffer significant consequences.
This at least is better incentive-wise, as they others in the same locality are the ones most affected, but the ability to enforce may be difficult due to various political constructions; the miners could be in such deep cahoots with the local government that the local government would willingly hurt other local entities in the vicinity of the polluting entity.



Regards,
ZmnSCPxj