It also means locking up the supply of ethereum draining liquidity and thus pumping the price.
Technologically it is not good for security: http://www.truthcoin.info/blog/pow-cheapest/
But as a pump and dump, it's an excellent thing to do.
If someone asked "how safe is proof of work?" ten years ago, everyone would have laughed and thought you're joking.
I'm only saying this because you're making a snarky comment while pretending to know exactly how it will play out. Nobody knows how it will work. Who knows? Maybe some unexpected human behavior like mining pools will happen in proof of stake approaches and it may end up going in a completely unexpected direction.
I see PoW and PoS as nearly analogous in this regard - the rich can dominate both and so on - except that PoS is far less wasteful.
I'm excited to see where this goes.
- The thing that they are wasting, capital, was created out of thin air by the act of switching to PoS
- There are large negative externalities to burning power by mining with hashes, which increase the cost to society of using PoW vs. PoS.
- Liquidity and capital-over-time that you have to “burn” (which makes PoS just another type of PoW) is actually capital that was fabricated from thin-air. So while PoS is not less wasteful, the act of switching-to-PoS is a gigantic act of wealth-creation.
- A much bigger point, relevant to the future of humanity on Earth: there are externalities to PoW which makes mining cost more to society than its $ cost to the miners. Instead of lobbying to include those externalities in the mining cost via various pollution taxes, we can sidestep it entirely by doing PoW with something that doesn't do physical damage to the earth: PoS.