Paypal intends to recognize and compensate Bitcoin mining companies for implementing measures to lessen the environmental impact of their businesses.
PayPal’s Blockchain Research Team, collaborating with Energy Web and DMG Blockchain Solutions, suggests an approach using “crypto-economic rewards” to motivate Bitcoin miners towards utilizing eco-friendly energy options, as mentioned in their blog update on April 22.
The company believes that the experimental incentive will lead to more conversations and new ideas regarding Bitcoin, and they are seeking input from industry experts on possible enhancements.
Bitcoin mining refers to the activity where people called “miners” use powerful computers to solve complex mathematical problems related to transactions on the Bitcoin network. By solving these problems, they add new blocks of verified transactions to the blockchain and are rewarded with newly created Bitcoins as compensation for their work. Miners compete to find solutions quickly, as the first one to do so receives the rewards. This process requires substantial computational power, leading to high energy consumption.
As per the proposal, “eco-miners” with renewable energy resources will be issued exclusive “green keys.” These keys correspond to their existing public keys.
By offering reduced transaction fees and an extra Bitcoin reward stored in a multisignature wallet, environmentally-friendly miners would be prioritized in transactions. Only these eco-conscious miners possess the keys to unlock the additional BTC reward.
“The proposal suggests that eco-friendly miners stand to benefit uniquely by mining these transactions due to an extra ‘staked’ Bitcoin reward exclusively available to them.”
Miners who adopt low-carbon energy sources for Bitcoin mining stand to gain a financial advantage, as this practice reduces their carbon footprint. The National Oceanic and Atmospheric Administration explains that such a shift in mining practices helps decrease carbon emissions and contributes to the slowing of global warming.
The paper suggests that the proposed solution will employ Energy Web’s “Green Proofs for Bitcoin” system for miners to earn certifications based on their use of renewable energy and grid impact. Miners who utilize clean energy can join the incentive program by registering and disclosing their green keys on this platform.
The proposed solution strives for a significant level of decentralization, simplicity in execution, and trustworthiness through dispersed incentives, according to the company.
Critics argue that the development of this solution comes as Bitcoin’s creation puts significant strain on American power grids and taxes.
Detractors have argued against Bitcoin mining due to its alleged negative impact on the environment. They point to concerns such as air and water pollution, excessive noise, and other potential hazards. The Rocky Mountain Institute approximates that this process consumes approximately 127 terawatt-hours (TWh) of energy annually – surpassing Argentina’s total energy usage.
At the same time, a New York Times report disclosed that Bitcoin mining consumes roughly seven times the amount of energy used by Google for all its worldwide activities in a year.
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2024-04-23 12:20