• 28 May, 2024
News

PayPal Offers “Crypto-Economic Incentives” for Bitcoin Miners: Report

PayPal proposed a new reward program for Bitcoin miners that uses environmentally friendly energy sources to make green mining more profitable. The initiative, developed in partnership with Energy Web and DMG Blockchain Solutions, intends to incentivize miners to employ low-carbon energy sources. PayPal’s Blockchain Research Group believes these experimental incentives will spark additional discussion and innovation around Bitcoin. 

The idea proposes issuing “green keys” to “green miners” connected to their public keys. Bitcoin transactions favor these miners and deliver cheaper fees, and an additional locked BTC reward is offered to a multisig payment address. Green miners will be motivated to mine these transactions while profit-seeking miners using low-carbon sources will get additional BTC payouts.

Bitcoin mining is a technique by which users known as “miners” solve cryptographic puzzles to generate new blocks of transactions on a cryptocurrency’s blockchain. The quickest miners receive bitcoins for their efforts. Miners employ big, energy-intensive computers to answer these challenges swiftly.

PayPal BRG tested low-fee transactions to assess their effectiveness under different on-chain transaction volumes. The network would either confirm or drop these transactions, increasing the chances for green miners to pick them up. An alternative approach could involve exploring private channels like the Lightning Network or smart contracts, but it would involve more complex implementation. 

The solution aims for decentralization, ease of implementation, trust independence, and incentive distribution. Miners who match the criteria for sustainable energy sources will earn unique “green keys” linked to their public keys. These green keys recognize the Bitcoin mining community’s environmentally conscious methods.

This platform’s creation is critical since bitcoin mining has been criticized for its high energy usage and environmental effects. By encouraging miners to switch to renewable energy sources, the platform hopes to reduce the carbon emissions linked with Bitcoin mining, adding to global efforts to battle climate change.

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