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Comment by bko | Hacker News Reader

Why don't we just relay on the price energy to allocate its use kind of like we do with almost everything else? That's the point of prices. If energy is not priced correctly then the government should adjust the price through a tax. But let's drop the morality shtick every time cryptocurrencies come up.

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We do tax lots of other kinds of energy, but you have the dilemma where crypto will use the least taxed, least cost energy anywhere in the world, dump the externalities into the atmosphere, and no one can tax energy everywhere to make them pay to clean it up. That's why you have things like coal fired electrical plants that used to no longer be competitive firing up at full capacity again to mine cryptocurrencies.

Crypto mining can't be curbed by carbon taxes in any energy market like normal electrical consumption.

You address this by taxing at the fiat on/off ramps. The ones with access to the deepest liquidity also happen to operate in jurisdictions that have functioning governments that are amenable to passing taxes on PoW. And if that doesn't work, you impose sanctions and tariffs on the countries that permit limitless PoW mining, up to and including black-holing their IP blocks.

It can be done. We banned CFCs after all.

You can ban CFCs in refrigerators/products that come through customs and monitor their emissions from space. The first is just impossible and the second probably impractical to pin on the carbon output of specific mining operations.

The taxes on PoW specifically interfacing with the financial system is a weak form of banning it and is definitely something that would work though, but what the gp seems to be arguing strongly against. They are asking why the energy price can't be updated to encompass the negative externalities instead of indirectly taxing it through the PoW's blockchain when it interfaces with the financial system.

I don't think this is right.

Carbon taxes on energy used to mine bitcoin will cut into profitability, leading to some proportion of the least-efficient miners turning off because they are no longer profitable.

How do you enforce the carbon taxes? If I mine somewhere off the books in a random part of the world, my block is not distinguishable from one that paid a carbon tax on its emissions.

Carbon taxes can very effectively reduce the amount of carbon-emitting energy used by bitcoin in jurisdictions it is enacted.

How to coordinate a global carbon tax seems like a much bigger problem than cryptocurrency. At 0.5% of global energy use, even if crypto mining was magically eliminated in an instant, 99.5% of the problem would still remain.

Also, feels weird to try to address this problem on the demand side instead of the supply side (which has much more direct influence). Machine Learning training is power intensive and location-insensitive, but it feels odd to worry about 'how to enforce carbon taxes on ML training'. "Which uses of energy are economically profitable" seems tangential to "how much carbon is produced by energy generation".

“Random parts of the world” are not cranking out the electricity required to secure the Bitcoin network. Your hypotheticals need better anchoring in reality.

I think what happened when china banned Bitcoin is instructive to what would happen if a nation attempted to increase the energy prices for mining in it's borders - much of it moved to the next cheapest option, like coal plants in Mongolia, however being banned in China did decrease the price and use overall. Which is basically my point, you would be playing wack-a-mole with policy across the whole world trying to work on it from the supply side and energy prices, it will just keep moving to the most enviromental-legislation-lagging internet connected place. However, legislating the interfaces between your country and the network do drop the overall use and demand for mining effectively.

That would just lead to all the mining happening in North Korea and Iran since they can't be sanctioned for defecting from climate accords.

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