On point (1), New York recently tried to ban Bitcoin mining, and it failed with a combination of lobbying by the industry and the electrical unions. Support for it with politicians collapsed. This is literally the democratic process, so if it didn’t go your way, you should support it. If alternatively you want a dictator (yourself or others) to ban it because of your perceived notion of what is a “good” use of electricity, I don’t know what to tell you. Move to China?
On point (2), this is a Malthusian argument. As a society we should be happy when more energy is generated, as that shows development. The total consumption of electricity is a reflection of how developed we are. Environmentalists should promote the generation of cleaner electricity rather than the outright ban of usage.
The bottom line is, electricity should be generated and offered to the market. Your subjective opinion of what is a “good” use of electricity is meaningless, as I find video games, jacuzzis, air conditioning, and all manner of other uses of electricity a waste. So you saying Bitcoin mining is a waste is just a simple opinion.
Personally I think the proposal you're describing is ridiculous and wouldn't do much in terms of affecting climate change, but I'm confused why you hold this up as an example of democracy working.
What is literally democratic about elected officials backing down from a proposal they introduced because of pressure by affected industries?
The interest groups that support Bitcoin mining have leverage with politicians because they represent a certain number of voters, political advertising and advocacy muscle, and donations to parties and candidates. This is how democracy works in every country on earth.
The existence of interest groups is independent of democracy. They form in pretty much every political system on the planet, not just democratic ones.
But speaking of point 1, there are minimum energy-efficiency standards for tons of products from cars to light bulbs to water heaters. Making PoS the minimum standard is no different.