PayPal has announced plans to reward Bitcoin miners who use green energy. This is meant to ease worries about mining’s environmental impact.
PayPal’s Blockchain Research Group is leading the project, with help from Energy Web and DMG Blockchain Solutions. The company suggests using “cryptoeconomic incentives” to encourage miners to use low-carbon energy sources. In an April 22 blog post, it said it wants to encourage more discussion and innovation in the Bitcoin mining community while asking for feedback on improving things.
PayPal’s Solution to Bitcoin Mining’s Energy Impact
Miners answer cryptographic puzzles to verify transactions on the blockchain. This process, called bitcoin mining, often uses a lot of energy. To stop this, PayPal’s plan includes “green keys” for miners who choose energy sources that are better for the earth. These “green keys” would be linked to public keys, letting transactions go to miners with smaller carbon footprints more often.
Green miners would get extra BTC awards locked in a multisig payout address that would only be open to them. This gives miners a reason to use renewable energy sources, which could reduce the damage that Bitcoin mining does to the world.
The idea is to use Energy Web’s “Green Proofs for Bitcoin” tool to give miners badges based on how much clean energy they use and how much damage they do to the grid. To participate in the incentive plan, miners can sign up and share their green keys on the site.
“Our solution aims to achieve decentralization, ease of implementation, and trust independence while distributing incentives,” PayPal said in the idea.
But some people are against the plan because they say it comes at a time when Bitcoin mining is putting a strain on local power grids and making people worry about the environment. Reports say that the process uses a huge amount of energy—in fact, figures say that it uses more energy than whole countries like Argentina.
An article in the New York Times discussed the energy used by Bitcoin mining. It said miners use about seven times as much energy as Google each year for its global activities.
As PayPal moves forward with its plan, the debate about how Bitcoin mining affects the environment continues. This has led to calls for the cryptocurrency business to adopt more environmentally friendly practices.
