The cryptocurrency market is currently already collapsing under its own weight. I don't think the idea should be attacked directly though (ideas are bulletproof), rather we should assess the side effects and ensure any harm is repaired. So if there was an opportunity to take direct action, it should have been at a regulatory level: carbon tax on the electricity, treat and regulate exchanges the same way you'd treat "brick&mortar" banks/exchanges/transfer services, tax mined coins as income, etc. GPU OEMs should've limited availability per buyer (no normal person needs more than 2 high-end gaming GPUs if they're actually just gaming). Even if you're a cloud provider, you should just charge extra for any excess wear on the hardware, maybe co-locate the "hot" nodes together, and leave politics at the door.
So on one hand, this is a form of censorship. I can imagine that given a sufficiently broad definition of a blockchain, you could use it to shut down any distributed, log-structured database project. On the other hand, the service provider also has the full right to refuse service to anyone, no explanation necessary - I'm certainly happy my company did so, whenever approached by any cryptobros.