In contrast, mining can drastically improve the return on capital by operating at larger and larger scales so as to get better and better deals on equipment and electricity. That kind scaling doesn't happen with proof of stake.
Yes and No. We saw what happened to very large mining farms that got wiped out in a matter of weeks as mining was cracked down on in china. Large ETH stakers wont be forced to liquidate their stake in the event they get kicked out of their current jurisdiction. In short, uncertainty about the future of crypto regulation makes it easier to be a staker than it does a miner.
Yes, this ensures a limited supply with PoW, right?
> If you try to remove real-world costs from that equation, you lose the counterbalancing effect.
I assume you can't remove real-world costs in the case of PoS, but yes I can see how the real-world costs will be much, much lower.
Are you saying that there is a good reason to keep those real-world costs higher? (pardon my ignorance, I haven't looked into the principle you describe here before).