People who are able to work for low-energy services will not save the environment. Only proof of work can build a sustainable future.
This opinion editorial is by Level39, who is a researcher focusing on Bitcoin, history, ethics, and energy.
It is a myth that Ethereum's recent Merge, from proof of work and proof of stake, has reduced energy consumption by 99.95%. This calculation does not include expensive enterprise server farms or corporations, nor the additional work required to complete proof of stake transactions globally. The cost of completing a transaction has not fallen, so follow the money. Fees won't decrease and any portion of the security budget used previously to buy energy for machines will now be used to buy energy for Ethereum's ruling classes — negating a lot of its lower energy bills.
Contrary to proof of work which encourages renewable energy innovation, and lowers methane emissions, proof of stake has no environmental benefit other than the fact that it obscures energy purchases made by those who enable it validating infrastructure. A neo-Luddite belief, that replacing inefficient people and their infrastructure by energy-intensive and economical machines is a net loss to the environment, is a key element of the environmental myth of proof-of-stake. This ideology dates back to the dawn of the Industrial Revolution.
The Age Of Luddites
The Luddite Rebellion (1811-1816) saw Ned Ludd inspire a group of skilled English textile workers to resist modernization, and to destroy a specific type of mechanized textile machine. Commonality was a reference to the common good or the tradition of commons. These machines were seen as a threat for communities and jobs that would soon disappear. The new machines could be more efficient than skilled artisans and work faster and cheaper. The machines could also cause mass unemployment and unequal power relations, it was feared. Protesting this technological advance, the Luddites attacked their owners and sabotaged the machinery.
Source: Penny Magazine 1884
Luddite fears proved to be wrong over time. The automation of work would not lead to job loss. It actually allowed humans to be more productive and creative with their time. The huge increase in raw material production meant that there was more work to create cost-effective and better products. Technology powered by economic energy improves life quality, wealth, and creates more employment opportunities.
Benefits of Automation
It is a long-standing practice to automate human labor using energy-intensive machinery. The English merchant fleet was 68,000 tons in weight and required 16,000 sailors to carry it. The commercial fees were used to buy energy, food, beer, clothing, heat, and medicine for thousands of sailors and their families. These fleets were known for their reliability, security, efficiency, safety, and reliability.
Global shipping is a highly energy-intensive process that requires very few people. The container ship OOC Hong Kong is the largest ever constructed. It can carry 200,000 tonnes and requires only 22 crew members. Instead of sourcing power to support sailors' populations, we create machines that use energy and free humans from mundane and repetitive tasks. This allows humans to be more productive, which leads to human flourishing.
Modern container ships, which are energy-intensive and efficient, are orders of magnitude more reliable than merchant fleets from the Middle Ages. It would be foolish to think container ships are more wasteful than sailing ships simply because they consume more energy. While machines are more energy-intensive than humans, they can replace human energy-intensive tasks.
The Proof of Work is a Novel Technology
The energy-intensive machines used to prove work are energy-intensive and put people out of work in traditional finance. This allows them to be more productive for society, so they can also purchase energy-intensive products. The old finance jobs are automated, and the new energy-intensive work that is part of global settlement shifts to smaller groups of miners in rural areas who have access to stranded electricity. This reverses some of the negative power relationships that Luddites rebelled against over a century ago.
Instead of huge buildings with energy-intensive bean counters, which were secured and backed around the globe by energy-intensive governments or militaries, we now have proof-of-work mining devices that are energy-intensive and can accurately guess the amount of beans needed for global settlement every ten minutes. This allows for reliable, non-stop global settlement, without any rest and at a lower overall cost.
Legacy Technology Is Proof of Stake
Legacy technology is the best proof of stake — it is not new. This is a classic form of equity and governance, which has been in use for centuries. It is easy to capture proof-of-stake assets in large financial institutions, which makes them a target for regulatory capture. This in turn leads to more people working to ensure compliance and maintain control, as well as increased fees. The only way to reduce or eliminate oligopolistic governance, repressive fees, and ensure censorship resistance is physical work by machines.
Original artwork by UdoJ. Kepler for Puck 1902. Modified by Level39.
Economic Footprints are Energy Footprints
Vitalik Buterin, Ethereum's co-founder, stated that Ethereum may have a greater security budget than Bitcoin in a recent interview. He implied that Ethereum's elite validations will have significantly greater energy-purchasing power that Bitcoin miners. The network's security budget is the revenue, fees and rewards that it extracts from its users. This limits the ability to buy energy.
This light reveals that the proof of stake is a group wealthy elites, a new breed bankers operating an inefficient database. They charge high fees and get greater revenue to make their efforts worthwhile. These elite insiders won't let you know that their security budgets and premined income will be used for energy purchases. It doesn't matter if the energy is bought for humans or machines. Accounting tricks are irrelevant to the environment.
The low energy cost of Ethereum is an omission from the security budget. It is an ESG trick of the hand — a deceit on the environmentally-conscious and gullible. It will cost you a lot to transfer your money, and Ethereum's elite can make huge profits by buying yachts, sports cars, and other carbon-intensive services. They'll be laughing all the way to the bank.
Security budgets are energy budgets
Bitcoin's block rewards will be halved every four years, meaning that miners will become more dependent on the fees paid by users for open global settlement. Buterin expects that fees and network activity will decrease because Bitcoin's deflationary nature encourages saving rather than spending. Buterin doesn't mention the fact that miners wouldn't have the money to buy much energy in such an environment and would instead fall into an energy consumption equilibrium just like all automated technologies throughout history.
It was a difficult decision
Buterin predicts that Ethereum would have a greater security budget than Bitcoin's. This would allow Ethereum's elite to buy more energy than Bitcoin miners. It will not make humanity more advanced or solve the environmental problems. Instead, it will obscure the carbon-intensive energy that its insiders will buy with their high security funds.
Instead of encouraging services degrowth, it would be better for humanity not to focus on building cheap, renewable energy. The future will require more energy as more services are electrified, so it is far better for humanity that we invest in economically overbuilding cheap, reliable power. If Buterin's predictions are true and Bitcoin's power consumption decreases with coin issuance then excess renewable energy can be used for other purposes.
Energy and Revenues
One dollar of revenue is not enough to buy one dollar worth of energy, especially when Bitcoin excels in sourcing low-cost energy. Even if everyone who benefits from Ethereum's premine, high fees, and staking rewards lives low-carbon lifestyles, the money could and will flow into more carbon-intensive activities.
Annually, Visa Mastercard, American Express and American Express consume less than 1% of what Bitcoin uses each year. But corporate energy consumption is not the whole story. Companies pay large salaries to employees, which they spend on energy-intensive tasks that machines can perform faster, cheaper, and more frequently. While traditional retail payments can take days to settle, and may not settle at all on holidays or weekends, Bitcoin payments settle consistently every 10 minutes. A payment rail's revenue is an indicator of how much resources it actually uses.
Source AR Invest
Critics might label Amazon's higher energy bills as an environmental disaster if Amazon replaced all its warehouse workers with robots. Robots, however, would consume raw energy instead of humans being paid a salary to purchase energy. There is no other way to get energy, and it's all energy purchases in one way or the other.
Bitcoin automates global settlement in the same way as robotization — trading energy intensive human bean counters for more cost-effective and efficient bean guessers with a transparent energy bill.
Nikola Tesla, who wrote more than 100 years ago, believed that efficiency from machines is a key to human progress and a growing need for energy. People can consume more resources because efficiencies reduce costs. It was essential to keep humanity moving forward through the availability of cleaner and cheaper energy. This vision is backed by evidence of work.
Engineers Face Environmental Problems
The flow of money that a company makes into the energy consumption of its employees is not considered in corporate carbon accounting. It would soon become obvious that corporate-based carbon accounting does not take into account the flow of money from a company to its human consumers of energy. There is no plan to supply cheap renewable energy for all people. Instead, wealthy people will virtue signal about their green businesses and get more money from their users to purchase more energy-intensive activities. This won't solve any real environmental problems, and it won't help humanity.
Environmental problems are often engineering issues that Luddism or degrowth can't solve. To reach their climate targets, countries must electrify and triple the amount of electrical production using sustainable energy. Around one-third of all energy generated is wasted, and only one industry has the ability to monetize the lowest valued 0.15%.
Bitcoin is a pioneering species that unlocks energy deserts for future uses and can help balance the renewable energy demand. It is the industry with the highest penetration rate of renewable energy. Only work can make methane emissions monetizable, grow greener plants, make stranded gas more economically feasible, capture energy from tires, and unlock the ocean's power for a billion people.
Only proof of work is required to have a net-negative carbon footprint for the next ten years, for those who love carbon-accounting. Responsible human progress is only possible by converting waste into energy. Not less energy monetization is needed.
Human progress is made through economic use of energy. It also indicates the price users will pay for value. Greenpeace and "Change The Code", two groups that are against Bitcoin's proof of work mining, want you believe that enriching a new breed bankers will save the world. Either they don't have the time or conflict of interest to understand what it takes to encourage responsible stewardship or they are marketing a Luddite myth.
Level39 contributed this guest post. These opinions are not necessarily those of Bitcoin Magazine or BTC Inc.
Frequently Asked Questions
What Should Your IRA Include in Precious Metals?
When investing in precious metals, the most important thing to know is that they aren't just for wealthy people. You don't need to be rich to make an investment in precious metals. In fact, there are many ways to make money from gold and silver investments without spending much money.
You could also consider buying physical coins like bullion bars, rounds or bullion bars. Shares in precious metals-producing companies could be an option. Another option is to make use of the IRA rollover programs offered by your retirement plan provider.
You will still reap the benefits of owning precious metals, regardless of which option you choose. They offer the potential for long-term, sustainable growth even though they aren’t stocks.
Their prices are more volatile than traditional investments. If you decide to sell your investment, you will likely make more than with traditional investments.
What is a Precious Metal IRA?
You can diversify your retirement savings by investing in precious metal IRAs. This allows you to invest in gold, silver and platinum as well as iridium, osmium and other rare metals. These are called “precious” metals because they're very hard to find and very valuable. They make excellent investments for your money and help you protect your future from inflation and economic instability.
Precious metals often refer to themselves as “bullion.” Bullion is the physical metal.
Bullion can be bought through many channels, including online retailers, large coins dealers, and some grocery shops.
An IRA for precious metals allows you to directly invest in bullion instead of purchasing stock shares. This allows you to receive dividends every year.
Precious metal IRAs are not like regular IRAs. They don't need paperwork and don't have to be renewed annually. Instead, you pay a small percentage tax on the gains. Plus, you get free access to your funds whenever you want.
Can I buy or sell gold from my self-directed IRA
Although you can buy gold using your self-directed IRA account, you will need to open an account at a brokerage like TD Ameritrade. If you have an existing retirement account, you can transfer funds to another one.
The IRS allows individuals to contribute up to $5,500 annually ($6,500 if married and filing jointly) to a traditional IRA. Individuals can contribute up to $1,000 annually ($2,000 if married and filing jointly) directly to a Roth IRA.
You should consider buying physical gold bullion if you decide to invest in it. Futures contracts, which are financial instruments based upon the price of gold, are financial instruments. These contracts allow you to speculate on future gold prices without actually owning it. But, physical bullion is real bars of gold or silver that you can hold in one's hand.
How much should I contribute to my Roth IRA account?
Roth IRAs are retirement accounts that allow you to withdraw your money tax-free. You can't withdraw money from these accounts before you reach the age of 59 1/2. There are some rules that you need to keep in mind if you want to withdraw funds from these accounts before you reach 59 1/2. You cannot touch your principal (the amount you originally deposited). No matter how much money you contribute, you cannot take out more than was originally deposited to the account. If you are able to take out more that what you have initially contributed, you must pay taxes.
The second rule is that your earnings cannot be withheld without income tax. Withdrawing your earnings will result in you paying taxes. Let's suppose that you contribute $5,000 annually to your Roth IRA. Let's also say that you earn $10,000 per annum after contributing. You would owe $3,500 in federal income taxes on the earnings. That leaves you with only $6,500 left. Because you can only withdraw what you have initially contributed, this is all you can take out.
Therefore, even if you take $4,000 out of your earnings you still owe taxes on $1,500. You'd also lose half the earnings that you took out, as they would be subject to a second 50% tax (half of 40%). You only got back $4,000. Even though you were able to withdraw $7,000 from your Roth IRA,
There are two types if Roth IRAs, Roth and Traditional. A traditional IRA allows you to deduct pre-tax contributions from your taxable income. You can withdraw your contributions plus interest from your traditional IRA when you retire. There are no restrictions on the amount you can withdraw from a Traditional IRA.
Roth IRAs don't allow you deduct contributions. However, once you retire, you can withdraw your entire contribution plus accrued interest. There is no minimum withdrawal amount, unlike traditional IRAs. You don’t have to wait for your turn 70 1/2 years before you can withdraw your contributions.
Can I keep a Gold ETF in a Roth IRA
While a 401k may not offer this option for you, it is worth considering other options, such an Individual Retirement Plan (IRA).
Traditional IRAs allow contributions from both the employer and employee. Another way to invest in publicly traded companies is through an Employee Stock Ownership Plan.
An ESOP offers tax benefits because employees can share in the company stock and any profits that it generates. The money invested in the ESOP is then taxed at lower rates than if it were held directly in the hands of the employee.
A Individual Retirement Annuity (IRA), is also available. With an IRA, you make regular payments to yourself throughout your lifetime and receive income during retirement. Contributions to IRAs don't have to be taxable
- This is a 15% margin that has shown no stable direction of growth but fluctuates seemingly at random. (smartasset.com)
- If you accidentally make an improper transaction, the IRS will disallow it and count it as a withdrawal, so you would owe income tax on the item's value and, if you are younger than 59 ½, an additional 10% early withdrawal penalty. (forbes.com)
- The price of gold jumped 131 percent from late 2007 to September 2011, when it hit a high of $1,921 an ounce, according to the World Gold Council. (aarp.org)
- Contribution limits$6,000 (49 and under) $7,000 (50 and up)$6,000 (49 and under) $7,000 (50 and up)$58,000 or 25% of your annual compensation (whichever is smaller) (lendedu.com)
- Instead, the economy improved, stocks rebounded, and gold plunged, losing 28 percent of its value in 2013. (aarp.org)
- 7 U.S. Code SS7 – Designation of boards for trade as contract markets
- 26 U.S. Code SS 408 – Individual retirement account
- Gold IRA – Add Sparkle to Your Retirement Nest Egg
- Understanding China's Evergrande Crisis – Forbes Advisor
- Saddam Hussein's Invasion Helped Uncage a Bear In 1990 – WSJ
- How do you keep your IRA Gold at Home? It's Not Exactly Legal – WSJ
The best way to buy gold (or silver) online
To buy gold, you must first understand how it works. Gold is a precious metallic similar to Platinum. It's very rare, and it is often used as money for its durability and resistance. It's difficult to use, so most people prefer purchasing jewelry made from it rather than actual bars.
There are two types today of gold coins. One is legal tender while the other is bullion. Legal tender coins are designed for circulation in a country. They often have denominations like $1 or $5 or $10.
Bullion coins can only be used as investment currency. They increase in value due to inflation.
They cannot be used in currency exchanges. One example is that if someone buys $100 worth gold, they get 100 grams with a $100 value. For every dollar spent, the buyer gets 1 gram of Gold.
Next, you need to find out where to buy gold. There are several options available if your goal is to purchase gold from a dealer. You can start by visiting your local coin shop. You can also try going through a reputable website like eBay. You may also be interested in buying gold through private sellers online.
Private sellers are individuals who offer to sell gold at retail or wholesale prices. Private sellers typically charge 10% to 15% commission on each transaction. Private sellers will typically get you less than a coin shop, eBay or other online retailers. This option is often a great choice for investing gold as it allows you more control over its price.
The other option is to purchase physical gold. While physical gold is easier than paper certificates to store, you still need to make sure it is safe. You need to make sure that your physical gold is safe by storing it in an impenetrable container like a vault or safety depositbox.
You can either visit a bank, pawnshop or bank to buy gold. A bank will provide you with a loan that allows you to purchase the amount of gold you desire. Pawnshops are small establishments allowing customers to borrow money against items they bring. Banks tend to charge higher interest rates, while pawnshops are typically lower.
A third way to buy gold? Simply ask someone else! Selling gold is easy too. It is easy to sell gold by contacting a company like GoldMoney.com. You can create a simple account immediately and begin receiving payments.
Title: The Environmental Myth Of Proof Of Stake
Sourced From: bitcoinmagazine.com/culture/bitcoin-not-proof-of-stake-solves-energy
Published Date: Wed, 21 Sep 2022 13:21:34 GMT