On January 20th, 2022, Ari Juels, professor at Cornell University and Chief Scientist at Chainlink Labs, spoke under oath at a congressional hearing on the energy impacts of blockchain. As a co-author of a paper which originally coined the term "proof-of-work" he is now in favor of proof-of-stake consensus chains. He is intentionally framing Bitcoin and proof of work as a waste of energy in order to promote proof of stake coins. He has a direct financial interest in ChainLink (https://research.chain.link/whitepaper-v1.pdf, see disclosures on page 32) which likely puts him at a conflict of interest for this hearing.
Beginning of going under oath:
Ari begins speaking:
- Ari does not mention his association as Chief Scientist at Chainlink Labs.
- Source: https://www.arijuels.com/
Ari's primary message that he wants to get across to Congress:
"Bitcoin does not equal blockchain. The tremendous promise of blockchain technology does not require Bitcoin or its energy intensive component called proof of work. In fact, some of the most exciting developments in the blockchain industry today are happening outside of the Bitcoin ecosystem."
Claim that Bitcoin consumes a massive amount of electricity at roughly half a percent of the world's total electricity:
Claim that nearly all new blockchains today use proof of stake to secure hundreds of billions of dollars in value:
- "These systems are faster than Bitcoin, and support what are called smart contracts, small programs that run on blockchains."
"Bitcoin doesn't readily support Defi or NFTs today":
- Bitcoin is Defi!
- Bitcoin had NFTs before any other chain with colored coins and Counterparty
Claim that Bitcoin mining is centralized to 4 mining pools and they can "technically control the whole system":
- Why this is blatently wrong: https://medium.com/hackernoon/bitcoin-miners-beware-invalid-blocks-need-not-apply-51c293ee278b
Explaining proof of work:
Claim that there's an opportunity cost that the resources could be used for other goals:
- Bitcoin does not waste energy: https://nakamotoinstitute.org/mempool/bitcoin-does-not-waste-energy/
Claim that miners becoming more efficient is deceptive and that crypto mining as a whole is becoming less energy efficient:
- Long read, but debunks this in that Bitcoin's peak energy usage is estimated to be 0.9% of global usage: https://assets-global.website-files.com/614e11536f66309636c98688/616dbaa0e7aa2af652d58983_NYDIG-BitcoinNetZero_SML.pdf
Claim that "proof of work is unnessary for the maintenance of blockchains":
- Says "proof of stake is a perfectly viable alternative."
- This is where the conflict of interest becomes a problem.
- Brushes off the "theoretical concern" that proof of stake validators can wipe the blockchain clean in that it's of little importance.
Claim that "end users don't care about terahashes, end users care about the number of transactions the system is processing":
- Mentioned Lightning Network as being "in its infancy, remains to be seen how successful it is, and it's not used by a terribly large fraction of users."
"The claim that proof of works provides protection against centralization simply isn't correct":
Claim that ".01% of the wallets in Bitcoin control 27% of the bitcoin":
- His source: https://mitsloan.mit.edu/shared/ods/documents?PublicationDocumentID=7981
- The source includes miners and exchanges.
Claim that miners can "take over the system":
- "The Bitcoin blockchain can in principle be controlled by a set of four entities. They're known as mining pools."
- They can "cause the network to simply stop processing transactions."
- Talks about ETC and BTG 51% attacks
- "Proof of stake, as I said, does raise some concerns about the rich getting richer but that's not really a function of the use of proof of stake. There are scientific papers suggesting that it's really a question of how the system is calibrated or parametarized."
Shilling oracles:
- This has nothing to do with "The Energy Impacts of Blockchains"