PayPal set to provide sustainable Bitcoin miners with BTC rewards
PayPal intends to offer incentives to Bitcoin mining companies that take measures to minimize the environmental impact of their operations. In collaboration with Energy Web and DMG Blockchain Solutions, PayPal’s Blockchain Research Group has proposed utilizing “cryptoeconomic incentives” to encourage miners to use low-carbon energy sources, as stated in an April 22 blog post. The company hopes that this experimental incentive will stimulate discussions and innovations within the Bitcoin industry, and it is seeking feedback from the industry for potential improvements.
Bitcoin mining involves miners solving cryptographic puzzles to create new blocks of transactions on a cryptocurrency’s blockchain. Miners with the fastest computers earn bitcoins for their efforts. The process requires high-energy computers to solve these puzzles quickly.
Under the plan, “green miners” who utilize sustainable energy sources will be given unique “green keys” linked to their public keys. Bitcoin transactions will be directed preferentially to eco-friendly miners by attaching lower fees, along with an additional BTC reward that can only be accessed by these green miners through a multisig payout address.
The proposal explains that “green miners will be incentivized to mine these transactions since they will be the only ones eligible for the additional ‘locked’ BTC reward.” This incentivizes profit-driven miners to use low-carbon energy sources in order to earn more Bitcoin.
According to the National Oceanic and Atmospheric Administration, the utilization of low-carbon mining technologies reduces carbon emissions and slows down global warming.
The proposed solution outlined in the paper will rely on Energy Web’s “Green Proofs for Bitcoin” platform to help miners obtain certification based on their clean energy usage and impact on the power grid. Green miners can participate in the incentive scheme by registering and sharing their green keys on the platform.
“The solution outlined here aims to achieve a good degree of decentralization, ease of implementation, and trust independence while distributing incentives,” the company stated.
Critics argue that this solution is being developed at a time when Bitcoin creation is placing a significant burden on local power systems and taxpayers in the US. They have attempted to ban Bitcoin mining, citing air, water, and noise pollution, among other environmental hazards. According to the Rocky Mountain Institute, the process consumes approximately 127 terawatt-hours (TWh) of energy annually, exceeding Argentina’s total energy consumption.
Additionally, a New York Times article revealed that Bitcoin miners use approximately seven times the energy that Google uses for its global operations each year.
