[1] http://en.wikipedia.org/wiki/Landauer%27s_principle
[2] If we're willing to use algorithms that don't destroy information, or willing to operate at arbitrarily low temperatures, as I understand it there's no theoretical limit to how small we can make the energy costs, but these restrictions seem highly impractical.
However, reversible algorithms are not in fact particularly impractical. They require a somewhat different way of thinking about things, but they're dramatically easier than e.g. quantum computing speedup.
Similarly, cryogenic computation is entirely reasonable, especially in space.
We are an order of magnitude worth of orders of magnitude away from that limit.
Specifically: 5.539×10^11 times as much energy (for the I7 920, picked randomly).
http://www.wolframalpha.com/input/?i=130+w+%2F+%280.0178+ele...
It's tough to beat smartly-designed specialized hardware in image processing. Some of the things I've done would require ten general purpose computers running in parallel to accomplish what I did in a single $100 chip. So, yes, less cost, higher data rate, reduced thermal load, reduced physical size, less power requirements, etc.
Maybe I don't get where he is going with this?
The places he suggests you can get a win seem sensible: 1) cases where the cost of dispatching instructions and handling intermediate results dominates, in which case a CISC-ish specialized instruction implemented in silicon may be a win over stringing together simpler operations; and 2) cases where you can get extra parallelization in hardware that isn't available through general-purpose instructions (e.g. doesn't map on nicely to SSE-style instructions).
In fact, the concept of "doing it in hardware" (be it specialized logic or dedicated generic processors) is alive and well (and bearing fruit) on every mainframe manufactured.
The fact we all use similar x86 boxes designed to be compatible with MS-DOS is a tragedy.
The PC standard set us back at least a decade, most probably two.
Partly thanks to the MS OS/2 2.0 fiasco, also resulting it taking ten years after Intel released the 80386 before 32-bit programming became popular. Needless to say, the x64 transition went much better.
http://news.ycombinator.com/item?id=3441885
Would Cutler or Letwin consider this acceptable?
Fwiw, Yosef K.'s own follow-up to his "HLL CPU challenge" did acknowledge several proposals he received as plausible candidates: http://www.yosefk.com/blog/high-level-cpu-follow-up.html
IMO, as is often the case, the answer lies in the middle. Look at the tremendous impact that adding AES acceleration features to x86 processors has on applications that require encryption.
What impact did you observe?
"The devil is in the details".
If your algorithm requires a million 32-bit multiplications, that sets a firm lower bound on how costly it is. There is no way to magically perform all those multiplications for free.