David Marcus is the former president of PayPal, former vice president of messaging at Facebook, former board member of Coinbase, and co-founder of the Libra project (later Diem).
PoW is essential for energy companies.
Lately, he has been working on his Lightspark project, based on Bitcoin’s Lightning Network.
He has already expressed very positive ideas about Bitcoin in the past, and this time he also spoke in favor of Proof-of-Work (PoW).
One of the things most people don’t know about energy production, consumption, and storage, is that the vast majority of energy produced must be consumed or it’s lost. Proof-of-Work is a huge asset for energy companies that can get past the FUD. https://t.co/8oixMs7QlS
— David Marcus (@davidmarcus) August 29, 2022
The main problem with PoW is that it consumes a lot of energy, which is why for example many other blockchains use or will use, Proof-of-Stake (PoS). However, PoW is the only consensus mechanism used by Bitcoin, so it also has the advantage that it allows BTC to be acquired.
PoW also provides a higher level of security and decentralization than PoS, but sometimes people prefer to sacrifice these features a little in favor of usability, i.e., faster and cheaper transactions, and environmental sustainability.
As far as Bitcoin is concerned, usability issues have been solved with the Layer 2 Lightning Network, which does not need Proof-of-Work to allow transactions to be executed.
However, the Bitcoin protocol still needs PoW and will continue to use it perhaps forever, since no one can arbitrarily change it.
But the specific advantage of PoW, namely that it allows BTC to be acquired by mining, may come in handy for example for those companies that have excess energy.
As Marcus rightly says, the vast majority of the electricity produced must be consumed immediately, otherwise, it is simply lost. In fact, there are no large-scale systems yet to store huge amounts of energy produced but possibly not consumed.
Marcus quotes Electric Reliability Council of Texas (ERCOT) CEO Bill Magness as saying that Bitcoin is a great opportunity for renewable energy producers.
Many forms of renewable energy, primarily solar and wind, do not allow for the ability to decide how much and when to produce because production is tied to the availability of the raw material, which naturally varies over time. For example, sunlight is only there during the day.
This means that if excess energy is produced at times when consumption cannot absorb all of it, some of it will inevitably be lost. For renewable energy producers, one possible solution could be to use the excess energy to mine Bitcoin through PoW, so they can monetize it in an alternative way instead of wasting it.
Also in Texas, they are already using flare gas to mine Bitcoin, again based on the concept that if you can use energy waste to mine BTC you can do it at almost no cost.
That’s why “Proof-of-Work is a huge asset for energy companies.”