[skybrian]

Miners are responding to incentives. The prize money they’re competing for is roughly $1.5 billion a month. That’s too damn high.

Lower the amount of money being given away and you’ll see a lot less mining. There are two ways that could be done, reducing the block reward or dropping the market price of Bitcoin.

[mrkramer]

Block reward is halving every 4 years, it is a hardcoded rule of Bitcoin; "The number of bitcoins generated per block is set to decrease geometrically, with a 50% reduction every 210,000 blocks, or approximately four years."[0]

To reflect on your other comment on mining reward and price; protocol and rules are set in stone and price can only be crashed by market meaning change in demand for Bitcoin.

[0] https://en.bitcoin.it/wiki/Controlled_supply

[skybrian]

Yes, I know. Something needs to be done about demand. A tax on holding bitcoin might convince honest individuals and businesses (who pay their taxes) to sell. It might not be enough but it would help.

Make the tax proportional to mining revenue, and maybe the "set in stone" rule would be reconsidered?

[incrudible]

A tax on CO2 emission would reduce the incentive to mine with expensive coal without affecting price at all. Moreover, it would reduce the incentive to do all sorts of inefficient things that aren't even on your radar, because it's not the moral panic of the day. It would also increase the incentive to develop carbon capture and CO2-neutral solutions.

[skybrian]

I agree. All the best economists recommend a carbon tax.

Such laws are difficult to pass, though. A tax on proof-of-work contests would politically be easier and encourage switching to better algorithms.

Best would be to do both. It's good to have incentives both to switch away from fossil fuels and to switch away from proof of work.