Date: Tue, 18 May 2021 06:46:58 +0000
To: Keagan McClelland <keagan.mcclelland@gmail.com>,
 Bitcoin Protocol Discussion <bitcoin-dev@lists.linuxfoundation.org>
From: ZmnSCPxj <ZmnSCPxj@protonmail.com>
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Cc: Michael Dubrovsky <mike@powx.org>
Subject: Re: [bitcoin-dev] Proposal: Low Energy Bitcoin PoW
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> A few things jump out at me as I read this proposal
>
> First, deriving the hardness from capex as opposed to opex switches the p=
rivilege from those who have cheap electricity to those who have access to =
chip manufacturers/foundries. While this is similarly the case for Bitcoin =
ASICS today, the longevity of the PoW algorithm has led to a better distrib=
ution of knowledge and capital goods required to create ASICS. The creation=
 of a new PoW of any kind, hurts this dimension of decentralization as we w=
ould have to start over from scratch on the best way to build, distribute, =
and operate these new pieces of hardware at scale. While I have not combed =
over the PoW proposed here in fine detail, the more complicated the algorit=
hm is, the more it privileges those with specific knowledge about it and th=
e manufacturing process.
>
> The competitive nature of Bitcoin mining is such that miners will be will=
ing to spend up to their expected mining reward in their operating costs to=
 continue to mine. Let's suppose that this new PoW was adopted, miners will=
 continue to buy these chips in ever increasing quantities, turning the afo=
rementioned CAPEX into a de facto OPEX. This has a few consequences. First =
it just pushes the energy consumption upstream to the chip manufacturing pr=
ocess, rather than eliminating it. And it may trade some marginal amount of=
 the energy consumption for the set of resources it takes to educate and cr=
eate chip manufacturers. The only way to avoid that cost being funneled bac=
k into more energy consumption is to make the barrier to understanding of t=
he manufacturing process sufficiently difficult so as to limit the prolifer=
ation of these chips. Again, this privileges the chip manufacturers as well=
 as those with close access to the chip manufacturers.
>
> As far as I can tell, the only thing this proposal actually does is creat=
e a very lucrative business model for those who sell this variety of chips.=
 Any other effects of it are transient, and in all likelihood the transient=
 effects create serious centralization pressure.
>
> At the end of the day, the energy consumption is foundational to the syst=
em. The only way to do away with authorities, is to require competition. Th=
is competition will employ ever more resources until it is unprofitable to =
do so. At the base of all resources of society is energy. You get high ener=
gy expenditure, or a privileged class of bitcoin administrators: pick one. =
I suspect you'll find the vast majority of Bitcoin users to be in the camp =
of the energy expenditure, since if we pick the latter, we might as well ju=
st pack it in and give up on the Bitcoin experiment.


Keagan is quite correct.
Ultimately all currency security derives from energy consumption.
Everything eventually resolves down to proof-of-work.

* Proof-of-space simply moves the work to the construction of more storage =
devices.
* Proof-of-stake simply moves the work to stake-grinding attacks.
* The optical proof-of-work simply moves the work to the construction of mo=
re miners.
* Even government-enforced fiat is ultimately proof-of-work, as the operati=
on and continued existence of any government is work.

It is far better to move towards a more *direct* proof-of-work, than to add=
 more complexity and come up with something that is just proof-of-work, but=
 with the work moved off to somewhere else and with additional moving parts=
 that can be jammed or hacked into.

When considering any new proof-of-foo, it is best to consider all effects u=
ntil you reach the base physics of the arrow of time, at which point you wi=
ll realize it is ultimately just another proof-of-work anyway.

At least, proof-of-work is honest about its consumption of resources.


Regards,
ZmnSCPxj