I'm suggesting that a different security scheme should be used, one which doesn't depend on wasting a shitload of electricity.
As I mentioned in my edit, an easy way (in terms of coming up with the solution, not implementing it) would be to price the externalities into the cost of energy. Then the electricity would only be used if it was actually worth it.
But I don't understand how transaction fees relate to it. That just means a different person pays to waste electricity.
And pricing in externalities won't actually stop people from wasting power, so you'd better have a good system set up to use that money to counteract the externalities.
I'm not talking about explicit transaction fees, I'm just talking about the energy use of the system on a per-transaction basis. Looking at the absolute energy consumed by Bitcoin isn't enough by itself, because you also need to account for how big Bitcoin is.
Pricing in externalities will absolutely stop people from wasting power pointlessly. People will only use power if the benefit is greater than the cost. This includes "waste" if the effort of stopping that waste is greater than the cost of the waste, but if externalities are priced in appropriately then that means there's actually a net benefit to that. It's only a problem if the cost to the world is higher but the person paying the bill doesn't see that.
In terms of bitcoin, if the electricity to mine one costs X on the miner's power bill, and that bitcoin can be sold for 2X, then the miner will keep on doing it even if the total cost of that electricity including damage to the planet and other such things is 3X. If you price in the externalities so that the power bill actually says 3X, then the miner will stop. You don't actually need to use the extra money to counteract the externalities.
But as some miners stop, the efficiency of mining goes up again.
In a general sense, the amount of money spent on mining will stay constant. If you make electricity 3x as expensive, then maybe 1/3 as much electricity will be wasted, but it's still fundamentally a waste.
If you don't use that extra money to undo the externalities, then the world is still getting more polluted just so bitcoin can spin in place.
This isn't something like a power plant where charging $X per ton of CO2 released will make them cut emissions to 0. You would need a per-bitcoin fee to stop waste. Charging per-kWh has a limited effect, because people will always buy [bitcoin price] * [bitcoins per day] worth of electricity.
If pricing in externalities increases the price goes up by a factor of three and bitcoin mining continues at 1/3rd the energy usage then it's no longer a waste. As long as you've done it correctly so that the price is accurate, then people will only use that energy if the benefit it creates is greater.
Using energy for some benefit is fine, and bitcoin clearly has some benefit. There's only a problem when the benefit is lower than the cost of the energy, and that only happens when the energy's price doesn't reflect its cost.
But bitcoin could be sustained on a fraction of that much energy. There is no benefit to mining beyond the point that prevents 51% attacks. After that it's all tragedy of the commons waste.
I mean, it basically is.
The built-in rewards drop every couple years, so the only reason people will continue to mine is for transaction fees.
What are you suggesting should be different?