PayPal, a leading international payments company, has put forward a proposal to enhance the sustainability of Bitcoin mining by introducing incentives for miners. The company’s Blockchain Research Group, in collaboration with Energy Web and DMG Blockchain Solutions, suggests using “cryptoeconomic incentives” to encourage miners to use low-carbon energy sources. The aim is to stimulate discussion and innovation within the Bitcoin industry, and PayPal is seeking feedback from the industry on potential improvements.
Under the proposal, miners who use sustainable energy sources would be rewarded with special “green keys” associated with their public keys. Bitcoin transactions would be prioritized for these “green miners” by attaching lower fees, along with an additional locked BTC reward that can only be claimed by them. This incentive motivates profit-driven miners to operate with low-carbon sources in order to receive the extra BTC rewards.
To implement this solution, PayPal’s proposal suggests utilizing Energy Web’s “Green Proofs for Bitcoin” platform, where miners can certify their clean energy usage and grid impact scores. Miners can register and share their green keys on the platform as part of the incentive program. The proposed solution has been successfully tested with Bitcoin miner DMG Blockchain Solutions Inc., which involved broadcasting multiple low-fee transactions to assess effectiveness under different levels of on-chain transaction volume. The results showed that green miners have a higher chance of processing these transactions.
While alternative approaches like the Lightning Network or smart contracts could be explored, the proposal emphasizes the importance of maintaining decentralization, ease of implementation, and trust independence, which the outlined solution aims to achieve. PayPal’s Blockchain Research Group concluded by stating that further details on potential implementation would be provided upon request.
Note: Cointelegraph reached out to PayPal for additional information but did not receive an immediate response.