PayPal, the renowned international payments company, has presented a groundbreaking proposal to enhance the economic viability of sustainable Bitcoin mining. In collaboration with Energy Web and DMG Blockchain Solutions, PayPal’s Blockchain Research Group has introduced the concept of “cryptoeconomic incentives” to incentivize miners to utilize low-carbon energy sources, as stated in a blog post on April 22. The company hopes that this experimental initiative will stimulate dialogue and innovation within the Bitcoin industry and is actively seeking feedback from industry experts to improve the proposal.
Under this proposal, miners who employ sustainable energy sources, known as “green miners,” would receive special accreditation in the form of “green keys” associated with their public keys. By attaching lower fees to Bitcoin transactions, these transactions would be preferentially routed to green miners, along with an additional locked BTC reward in a multisig payout address that can only be claimed by green miners. This creates an incentive for profit-driven miners to operate with low-carbon sources in order to receive the extra BTC rewards.
To ensure the credibility of green miners, the proposed solution leverages Energy Web’s “Green Proofs for Bitcoin” platform, which certifies miners based on their clean energy usage and grid impact scores. Green miners can register and share their green keys on this platform as participants in the incentive program. PayPal BRG has already conducted successful tests of this solution with Bitcoin miner DMG Blockchain Solutions Inc. During the test, multiple low-fee transactions were broadcasted to observe the effectiveness of the system under different levels of on-chain transaction volume. The results showed that green miners had a higher chance of picking up these transactions, either through confirmation or when they were dropped by the network.
While alternative approaches such as utilizing private channels like the Lightning Network or smart contracts were considered, it was noted that these options would involve trade-offs such as more complex implementation. Therefore, the proposed solution aims to achieve decentralization, ease of implementation, and trust independence while distributing incentives.
Cointelegraph reached out to PayPal for further details on the potential implementation of this proposal but did not receive an immediate response.