I fully understand that some people don’t want to hear it. I am well aware that change is probably the hardest thing humans must do. Yet sometimes we put things off long enough that changes happens to us anyway…
Let’s take a look at “that” tweet.
The writing has been on the wall for the environmental problems of Proof of Work for a long time, but this single tweet has highlighted it (and then double-underline-exclamation-marked it). At the same time, from NFTs to smart contracts and automation, nobody is denying the value that crypto brings anymore, so what are the alternatives here?
The primary competition to the intentionally wasteful Proof of Work (PoW) is Proof of Stake (PoS), where it is the value of the asset that secures the network rather than arbitrary and glorified dice-rolling. And if we needed any indicator of that it can be taken from the rapid rise and rise of PoS projects over the last year or so (and the abysmal performance of the PoW projects launched alongside them).
The key arguments in favour of PoS over PoW (afaik) can be summarised as:
- Decentralisation. PoS is better for decentralisation as it permits anyone on the network, large or small, to create, contribute, and secure the network with staking pools. The PoW argument for decentralisation is flawed as PoW coins are mostly controlled by large mining operations with expensive hardware that is out of reach for most people anyway.
- Efficiency/Speed. PoS does not need to wait for miners to find a block. Blocks can be added asynchronously if need be. This permits near instant transactions. Solana for example has 400ms blocks. This kind of performance is completely out of reach for PoW.
- PoW miners are an external liability. Miners are a third party who mostly exist outside of the actual community of network users. A PoW coin is directly funding an activity that contributes absolutely nothing to the network, and that burden is carried and paid for by the users.
- PoW creates constant and unpredictable sell pressure on the value of the network. Let’s face it, the only time you hear about miners is usually, “the miners are dumping their coins again”.
- PoS rewards users and holders rather than this external cohort of “miners”. I have personally never had any success mining and that’s not for want of trying, it’s simply because the cost of hardware is prohitbitabely expensive. PoW love to argue that PoW let’s anyone participate, but the reality tells a very different story. On the other hand, with PoS projects even a smaller holder can actively earn staking rewards and contribute to the security of the network.
- It doesn’t matter where the energy comes from it’s still wasteful. PoW love to trill about the source of the energy being “waste” energy or “mostly from renewables”, and that may well be true, but that doesn’t change the fact that the energy is being intentionally wasted. This is the very nature and design of mining. That same energy could be put into kinetic or battery storage to balance the grid, the compute power could be used to render graphics, or run scientific projects like protein folding to cure cancer, or even power Seti@home… Literally anything else would be better than intentionally wasting it with PoW.
- Market expectations. This is the final nail in the coffin… The new public expectation is for gas fees is zero or close enough to zero. That is the “game changing accessible money” that this was supposed to be. That is what we signed up for. PoW encumbers that mission and I don’t think anyone pays $30+ gas fees to miners willingly, the only reason people pay those fees currently is because that particular project hasn’t been ported to a cheaper PoS network… yet. You can see evidence of this in the rise of BSC, Solana, Tezos and Cardano. All networks which are currently cutting Ethereum’s lunch, and projects like Nano or IOTA that have zero transaction fees. PoW projects don’t live in isolation, and these new expectations are finally catching up with them.
- Networks are nothing without users, networks run just fine without miners. PoS projects have been showing us that there is not only an environmantally ethical path beyond PoW, but that it is also an alternative that is finally able to compete against the often cited VISA transaction throughput. Users, when aware of the alternatives, have been flooding to projects. The only reason Ethereum has gotten off so lightly is that they are already in the transition towards PoS. In fact, Vitalik has had this flaged for years.
In summary, PoW was useful when crypto was not worth anything yet… At that time there is no value to stake, so PoW provided a phsycial investment in the network… But the moment the space actually had value, it was that very value that secured the network, not PoW.
PoW maxis will argue that PoS can be easily centralised… But the obvious counter to that is, take a look around. Miners are so centralised and so prevalent that their activity alone has single handedly cause this societal and environmental roadblock to the entire crypto space. If that is not the very definition of centralisation, I don’t know what is.
And to any miners reading this, hark, a warning: sell your mining rigs now while you still can.
