That argument makes no sense to me. It essentially boils down to "people can choose whatever level of security they want, so given that they chose the current level of security that must be the most energy efficient -- and since merchants have to pay for this system they always choose the cheapest fees which must therefore mean they choose the miner with the cheapest energy source". I'm not sure what this argument is meant to prove other than PoW chooses the most energy efficient way of doing PoW, but it doesn't prove the PoW isn't an energy hog.
This argument also explicitly ignores schemes such as PoS that don't have this massive power drain, and also ignores interesting schemes like PoC (Proof of Capacity)[1] that also don't have this power drain (apparently).
I’m not going to spend a bunch of time reading this particular whitepaper, but not one of the three proof-of-capacity “mining” systems I’ve looked at are Sybil resistant and decentralized.
This argument also explicitly ignores schemes such as PoS that don't have this massive power drain, and also ignores interesting schemes like PoC (Proof of Capacity)[1] that also don't have this power drain (apparently).
[1]: https://www.burst-coin.org/proof-of-capacity