International payments giant PayPal has proposed to make sustainable Bitcoin (BTC $66,375) mining more economically attractive by rewarding miners through incentives layered on top of the Bitcoin network.
PayPal’s Blockchain Research Group, in collaboration with Energy Web and DMG Blockchain Solutions, has proposed using "cryptoeconomic incentives" to encourage Bitcoin miners to use low-carbon energy sources, according to an April 22 blog post.
The firm hopes that the experimental incentive contributes to further discussion and innovation around Bitcoin and is seeking industry feedback on potential improvements.
Under the proposal, “green miners” who use sustainable energy sources would be accredited with special “green keys,” which are associated with their public keys.
Bitcoin transactions would be preferentially routed to these green miners by attaching lower fees but with an additional locked BTC reward in a multisig payout address that only the green miners can claim.
“Green miners will be incentivized to mine these transactions since they will be the only ones eligible for the additional “locked” BTC reward,” it explained,
This incentivizes rational profit-driven miners to operate with low-carbon sources to get the extra BTC rewards.
Green miner transactions. Source: PayPal Blockchain Research Group
According to the paper, 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 participants of the incentive program.
PayPal BRG said that it has successfully tested the proposed solution with Bitcoin miner, DMG Blockchain Solutions Inc.
During the test, it broadcasted multiple low-fee transactions to observe effectiveness under different levels of on-chain transaction volume.
Depending on transaction volume, “these transactions would either take a long time to confirm or eventually be dropped by the network,” it observed before adding: “This would increase the chances for green miners to pick up these transactions.”
An alternative approach would involve exploring private channels such as the Lightning Network or smart contracts, but there would be trade-offs such as more complex implementation, it added.
“The solution outlined here aims to achieve a good degree of decentralization, ease of implementation and trust independence while distributing incentives,” PayPal BRG concluded.
Cointelegraph contacted PayPal for further details on potential implementation but did not receive an immediate response.
Information on these pages contains forward-looking statements that involve risks and uncertainties. Markets and instruments profiled on this page are for informational purposes only and should not in any way come across as a recommendation to buy or sell in these assets. You should do your own thorough research before making any investment decisions. FXStreet does not in any way guarantee that this information is free from mistakes, errors, or material misstatements. It also does not guarantee that this information is of a timely nature. Investing in Open Markets involves a great deal of risk, including the loss of all or a portion of your investment, as well as emotional distress. All risks, losses and costs associated with investing, including total loss of principal, are your responsibility. The views and opinions expressed in this article are those of the authors and do not necessarily reflect the official policy or position of FXStreet nor its advertisers.
Recommended Content
Editors’ Picks
![Ethereum has lost its “ultra” sound money status, faces key rectangle resistance hurdle](https://editorial.fxstreet.com/images/Markets/Currencies/Digital%20Currencies/Ethereum/Ethereum_Coins_31_03_XtraSmall.jpg)
Ethereum has lost its “ultra” sound money status, faces key rectangle resistance hurdle
Ethereum is up 0.5% on Thursday following a recent analysis showing that the top altcoin lost its "ultra" sound money narrative. Meanwhile, ETH ETFs recorded net inflows for the first time after nine days of consecutive outflows.
![Solana bears dominate market as SunPump has potentially led to less demand for SOL](https://editorial.fxstreet.com/images/Markets/Currencies/Cryptocurrencies/Solana/Solana_Crypto_31_XtraSmall.jpg)
Solana bears dominate market as SunPump has potentially led to less demand for SOL
Solana is down 2.5% on Thursday following bearish signals across its funding rate and total fees captured. SOL's weak performance could also be linked to the declining traction seen in its meme coin generation platform Pump.fun.
![AI tokens see narrow gains as Wall Street banks raise price targets on NVDA](https://editorial.fxstreet.com/images/Markets/Currencies/Cryptocurrencies/PEPE/PEPE_coin_2_XtraSmall.jpg)
AI tokens see narrow gains as Wall Street banks raise price targets on NVDA
AI tokens NEAR, ICP, RENDER and TAO briefly traded in the green on Thursday following Wall Street banks' positivity toward Nvidia's earnings report. While a correction followed, these tokens could rally if NVDA meets expectations.
![XRP back above $0.57 even as Ripple traders take $8 million in profits](https://editorial.fxstreet.com/images/Markets/Currencies/Cryptocurrencies/cryptos_XtraSmall.jpg)
XRP back above $0.57 even as Ripple traders take $8 million in profits
Ripple (XRP) traders have consistently taken profits on their holdings in the last two weeks, per Santiment data. Once again, traders have grabbed $8.36 million in profit so far on Thursday. Typically, profit-taking negatively influences the asset as it increases the selling pressure.
![Bitcoin: Will BTC continue its ongoing decline?](https://editorial.fxstreet.com/images/Markets/Currencies/Digital%20Currencies/Bitcoin/bitcoin_5_XtraSmall.jpg)
Bitcoin: Will BTC continue its ongoing decline?
Bitcoin (BTC) trades above $59,000 on Friday, but it has lost 7.5% this week so far after being rejected around the daily resistance of $65,000. The decline is supported by lower demand from the US spot Bitcoin ETFs, which registered a net outflow of $103.8 million, falling Bitcoin's Coinbase Premium Index, and a spike in Network Realized Profit/Loss. However, some investors seem to be taking the chance to buy BTC amid this price dip, as shown by the Exchange Netflow data.
![Moneta Markets review 2024: All you need to know](https://editorial.fxstreet.com/images/IT/Testing/Review/FXSBadgeCertifiedBackg_XtraSmall.png)
Moneta Markets review 2024: All you need to know
VERIFIED In this review, the FXStreet team provides an independent and thorough analysis based on direct testing and real experiences with Moneta Markets – an excellent broker for novice to intermediate forex traders who want to broaden their knowledge base.