PayPal, a leading international payments company, has put forth a proposal to make sustainable Bitcoin mining more economically appealing by introducing incentives on top of the Bitcoin network. In collaboration with Energy Web and DMG Blockchain Solutions, PayPal’s Blockchain Research Group has suggested using “cryptoeconomic incentives” to encourage miners to utilize low-carbon energy sources. The company hopes that this experimental incentive will foster further discussion and innovation in the Bitcoin industry, and is actively seeking feedback from the industry to improve the proposal.
Under this proposal, miners who use sustainable energy sources, also known as “green miners,” would receive special “green keys” associated with their public keys. Bitcoin transactions would be directed towards these green miners, offering lower fees and an additional locked BTC reward in a multisig payout address that only they can claim. By doing so, rational profit-driven miners are incentivized to operate with low-carbon sources in order to receive the extra BTC rewards.
The proposed solution leverages Energy Web’s “Green Proofs for Bitcoin” platform, which certifies miners based on their clean energy and grid impact scores. Green miners can register and share their green keys on the platform as participants in the incentive program. The proposed solution has been successfully tested with Bitcoin miner DMG Blockchain Solutions Inc., where multiple low-fee transactions were broadcasted to evaluate their effectiveness under different levels of on-chain transaction volume. These transactions would either take a long time to confirm or be dropped by the network, increasing the likelihood of green miners picking them up.
While alternative approaches such as the Lightning Network or smart contracts could be explored, they come with trade-offs such as more complex implementation. PayPal’s Blockchain Research Group aims to achieve a decentralized, easy-to-implement, and trust-independent solution that effectively distributes incentives.
Cointelegraph reached out to PayPal for further details on the potential implementation of this proposal, but did not receive an immediate response.