PayPal Proposes Incentive Plan for Greener Bitcoin Mining

According to their latest research, PayPal has introduced a proposal to encourage eco-friendly Bitcoin mining. The initiative aims to reduce the environmental impact of mining by offering extra Bitcoin to miners who use sustainable energy sources. This report, from PayPal’s Blockchain Research Group, was made public late Monday. The plan targets Bitcoin's proof-of-work (PoW) system, known for its high energy consumption.

PayPal suggests setting aside additional Bitcoin rewards specifically for miners who operate using renewable energy. These miners are termed "green miners" and are identified through unique cryptographic hashes known as "green keys." Transactions specifically designed for green miners would include a multi-sig wallet with additional Bitcoin, accessible only with green keys.

These transactions would also feature lower fees to attract these miners, fostering a more environmentally friendly approach to Bitcoin mining. Despite the incentives, the proposal has received mixed reactions. Critics argue that many miners are already transitioning to greener methods without extra incentives. Moreover, there's concern that non-green miners might still process these transactions if the low fees are not sufficiently discouraging.

PayPal's report also outlines alternative strategies if the initial plan doesn't work, such as using smart contracts or the Lightning Network to reward green miners directly. However, these methods would require greater trust among participants. This streamlined approach from PayPal's research group, which has been active since 2015, aims to make Bitcoin mining more sustainable while retaining its profitability and efficiency.