PayPal’s Blockchain Research Group, in partnership with Energy Web and DMG Blockchain Solutions, has proposed a new system to incentivize Bitcoin miners to adopt low-carbon energy sources.
The proposal, explained in a blog post published on April 22, involves implementing “cryptoeconomic incentives” to encourage miners to embrace green energy practices. Under this scheme, miners using sustainable energy sources would be accredited with special “green keys” linked to their public keys.
According to the blog post, the proposed solution will leverage Energy Web’s “Green Proofs for Bitcoin” platform for miners to get certified based on their clean energy and grid impact scores. The green miners can register and share their green keys on the platform as incentive program participants.
As part of the incentive program, Bitcoin transactions would be directed preferentially to these green miners, offering lower fees and an additional locked BTC reward in a multisig payout address accessible only to them. This approach aims to motivate profit-driven miners to use low-carbon sources to receive extra BTC rewards.
“Green miners will be incentivized to mine these transactions since they will be the only ones eligible for the additional ‘locked’ BTC reward,”
the blog post explained.
PayPal BRG and Energy Web also presented a research paper detailing the proposed solution. According to the paper, the proposed solution has already undergone successful testing with Bitcoin miner DMG Blockchain Solutions Inc. During the test; multiple low-fee transactions were broadcasted to observe its effectiveness under varying levels of on-chain transaction volume.
The paper also mentioned an alternative approach involving exploring private channels, like the Lightning Network or smart contracts. However, it noted this approach would come with trade-offs, including a more complex implementation.
Both companies concluded their proposed solution is easy to implement and would achieve decentralization while effectively distributing incentives. They emphasized it furthers their aim of enhancing the economic viability of environmentally friendly Bitcoin mining.
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