PayPal’s Blockchain Research Group has joined Energy Web and DMG Blockchain Solutions to support “sustainable” Bitcoin mining. According to the document, the collaboration “presents an opportunity to accelerate the clean energy transition” using crypto-economic incentives.
PayPal Research on Bitcoin Mining
In a recently published In its article, PayPal’s Blockchain Research Group (BRG) proposed “the possibility of a more sustainable future” in Bitcoin mining. The survey found that as of April 2, data estimated annualized emissions of more than 85 million tons of carbon dioxide due to Bitcoin’s proof-of-work (PoW) consensus mechanism:
The reason behind this significant impact is the proof-of-work (PoW) consensus mechanism that secures the Bitcoin network. In PoW, miners compete in a competitive race to find solutions (that’s to saycryptographic hashes) for Bitcoin blocks, requiring powerful computer hardware like ASIC machines.
This race and its requirement for robustness computing power require significant electricity. Miners’ use of carbon-based energy sources therefore “drives the underlying greenhouse gas emissions footprint of the Bitcoin network.”
As a solution, PayPal’s BRG aims to “encourage desired activities through the crypto-economy” to improve and optimize “existing, proven strong networks.” Additionally, the company wants to support “more environmentally friendly” mining and encourage other miners to switch to cleaner energy sources.
Bitcoin rewards for “green mining”
The paper suggests routing on-chain transactions to “green miners” via low transaction fees with a BTC reward “locked” in a multisig payment address. The rewards would serve as an incentive to mine these transactions, as only green miners would be eligible to receive them.
The solution relies on identifying miners who use low-emission energy sources. After identification, their public keys, called “green keys”, would be used to reward miners with Bitcoin in a trust-independent method thanks to a “1-of-not multisignature script. As a result, the payment address would allow miners with green keys to claim the rewards.
Proposed solution to incentivize green Bitcoin mining. Source: PayPal's BRG
Vendors such as Energy Web would help identify green miners and integrate them into the solution. The nonprofit organization offers a “Green Proofs for Bitcoin” initiative that promotes transparency and “supports alignment between Bitcoin mining and the global decarbonization effort.”
Miners would request and share their sustainable mining certifications through the Green Proofs for Bitcoin validation platform.
Additionally, the proposed solution has been successfully tested with DMG. The company released several low-cost transactions to test how effectively they would work at different chain levels. transaction volumes.
Depending on transaction volume, low-cost transactions would “take a long time to confirm or would eventually be abandoned by the network.” This would increase the chances of green miners recovering them.
According to the document, the compromises were “acceptable”, but alternative solutions could be evaluated:
It is possible to design alternative solutions where transactions and rewards can be sent to miners via a private mechanism rather than using the public memory pool.
The exploration of technologies such as smart contracts or the lighting network is also proposed as an alternative way of addressing these issues. However, this could come at the expense of “trust dependence and more complex implementation”.
However, it should be noted that Bitcoin mining is controversial. While many incumbent companies, such as PayPal and others, have targeted the network due to its purported power-intensive use and carbon emissions, other research has highlighted the growing use of renewable energy and low carbon emissions produced by the emerging industry, as shown in the example below. the table below.
In an article published by Forbes, analyst Jonathan Buck underlines:
CCAF has determined that the bitcoin industry uses a significant amount of renewable energy, sometimes more than half, depending on jurisdiction. This demonstrates the industry’s commitment to sustainability and its potential role in the green revolution.
BTC is trading at $65,972.43 on the one-day chart. Source: BTCUSDT on TradingView
Featured image from Unsplash.com, chart from TradingView.com
