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 its 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 considered a threat to communities as well as jobs that would soon be obsolete. The new machines could be more efficient than skilled artisans and work faster and more cheaply. 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. This resulted in more work to create cost-effective and elaborate products. Technology powered by economic energy improves life quality, wealth, and creates more employment opportunities.
Automation offers many benefits
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-consuming 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.
Source: Level39
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 better for humanity that we invest in economically overbuilding renewable 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 is able to source the lowest cost energy in low demand. 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 and American Express use less than 1% of the electricity used by Bitcoin. 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 reflected in proof 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 power to the ocean for one 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 amount should I invest in my Roth IRA?
Roth IRAs let you save tax on retirement by allowing you to deposit your own money. The account cannot be withdrawn from until you are 59 1/2. If you decide to withdraw some of your contributions, you will need to follow certain rules. First, your principal (the original deposit amount) cannot be touched. This means that you can't take out more money than you originally contributed. You must pay taxes on the difference if you want to take out more than what you initially contributed.
The second rule is that your earnings cannot be withheld without income tax. Also, taxes will be due on any earnings you take. Let's assume that you contribute $5,000 each year to your Roth IRA. In addition, let's assume you earn $10,000 per year after contributing. Federal income taxes would apply to the earnings. You would be responsible for $3500 You would have $6,500 less. Since you're limited to taking out only what you initially contributed, that's all you could take out.
Therefore, even if you take $4,000 out of your earnings you still owe taxes on $1,500. You would also lose half of your earnings because they are subject to another 50% tax (half off 40%). So even though your Roth IRA ended up having $7,000, you only got $4,000.
There are two types of Roth IRAs: Traditional and Roth. A traditional IRA allows you to deduct pre-tax contributions from your taxable income. When you retire, you can use your traditional IRA to withdraw your contribution balance plus interest. There are no restrictions on the amount you can withdraw from a Traditional IRA.
Roth IRAs don't allow you deduct contributions. Once you are retired, however, you may withdraw all of your contributions plus accrued interest. There is no minimum withdrawal requirement, unlike traditional IRAs. You don’t have to wait for your turn 70 1/2 years before you can withdraw your contributions.
Should You Purchase Gold?
Gold was once considered an investment safe haven during times of economic crisis. Many people today are moving away from stocks and bonds to look at precious metals, such as gold, as a way to diversify their investments.
While gold prices have been rising in recent years they are still low relative to other commodities, such as silver and oil.
Some experts believe that this could change very soon. Experts believe that gold prices could skyrocket in the face of another global financial crisis.
They also note that gold is increasingly popular because of its perceived intrinsic value and potential return.
These are some things you should consider when considering gold investing.
- Consider whether you will actually need the money that you are saving for retirement. It's possible to save for retirement without putting your savings into gold. Gold does offer an extra layer of protection for those who reach retirement age.
- Second, make sure you understand what you're getting yourself into before you start buying gold.There are several different types of gold IRA accounts available. Each offers varying levels of flexibility and security.
- Remember that gold is not as safe as a bank account. Losing your gold coins could result in you never being able to retrieve them.
If you are thinking of buying gold, do your research. And if you already own gold, ensure you're doing everything possible to protect it.
Is physical gold allowed in an IRA.
Gold is money, not just paper currency or coinage. It is an asset that people have used over thousands of years as money, and a way to protect wealth from inflation and economic uncertainties. Investors use gold today as part of their diversified portfolio, because it tends to perform better in times of financial turmoil.
Today, many Americans invest in precious metals such as gold and silver rather than stocks and bonds. Although owning gold does not guarantee that you will make money investing in it, there are many reasons to consider adding gold into your retirement portfolio.
Another reason is that gold has historically outperformed other assets in financial panic periods. Gold prices rose nearly 100 percent between August 2011 and early 2013, while the S&P 500 fell 21 percent over the same period. Gold was one of the few assets that performed better than stocks during turbulent market conditions.
Another benefit to investing in gold? It has virtually zero counterparty exposure. Even if your stock portfolio is down, your shares are still yours. You can still own your gold even if the company where you invested fails to pay its debt.
Finally, gold provides liquidity. This means that, unlike most other investments, you can sell your gold anytime without worrying about finding another buyer. It makes sense to buy small quantities of gold, as it is more liquid than other investments. This allows you take advantage of the short-term fluctuations that occur in the gold markets.
Statistics
- 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)
- Gold is considered a collectible, and profits from a sale are taxed at a maximum rate of 28 percent. (aarp.org)
- 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)
- This is a 15% margin that has shown no stable direction of growth but fluctuates seemingly at random. (smartasset.com)
External Links
bbb.org
forbes.com
- Gold IRA, Add Sparkle to Your Retirement Nest egg
- Understanding China's Evergrande Crisis – Forbes Advisor
investopedia.com
- Do You Need a Gold IRA to Get Retirement?
- What are the Options Types, Spreads, Example, and Risk Metrics
finance.yahoo.com
How To
Gold IRAs: A Growing Trend
Investors are increasingly turning to gold IRAs as a way to diversify and protect their portfolios from inflation.
Owners can invest in gold bars and bullion with the gold IRA. This IRA can be used to grow your wealth tax-free and is an alternative option to stocks and bonds.
A gold IRA allows investors the freedom to manage their wealth without worrying about volatility in the markets. They can also use the gold IRA as a protection against potential problems like inflation.
Investors also get the unique benefits of owning physical Gold, including its durability, portability, flexibility, and divisibility.
A gold IRA provides many additional benefits. One is the ability for heirs to quickly transfer ownership of gold. Another is the fact that gold is not considered a currency or a commodities by the IRS.
This is why the gold IRA has become increasingly popular with investors looking to provide financial security during times of financial uncertainty.
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By: Level39
Title: Proof Of Stake Is An Age-Old Environmental Myth
Sourced From: bitcoinmagazine.com/culture/bitcoin-not-proof-of-stake-solves-energy
Published Date: Wed, 21 Sep 2022 13:21:34 GMT
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