In order to solve the environmental issues related to Bitcoin mining, PayPal's Blockchain Research Group is putting forth an innovative solution in partnership with Energy Web and DMG Blockchain Solutions. The study employs the fundamental economic tenets of cryptocurrencies to motivate miners to adopt sustainable practices.
Bitcoin's Proof-of-Work (PoW) consensus mechanism, which is essential to its strong security, has a high energy cost associated with it. This new research suggests a solution that smoothly fits into the current Proof of Work framework, encouraging miners to switch to using renewable energy.
Miners who use sustainable energy sources are designated as "green miners" by the system, and they are given special public keys, also called "green keys," which serve as identities within the network.
These green miners then receive transactions with cheaper fees. A crucial component, though, sets these transactions apart: a part of the mining reward is "locked" in a unique multisignature payout address.
For green miners, this locked reward becomes a vital source of motivation. This extra reward can only be unlocked and claimed by miners who own green keys, which provides significant economic incentives to favor transactions that explicitly encourage sustainable mining practices.
The study highlights that this strategy doesn't call for any significant modifications to Bitcoin's core features. Rather, it modifies the current economic structure to affect the actions of miners.
If this approach is put into place successfully, the environmental impact of Bitcoin mining might be greatly reduced. This study also shows how cryptoeconomic incentives can drive beneficial change inside well-established blockchain networks. In the future, the researchers believe that this strategy might be utilized as a model to adopt comparable sustainability-focused solutions across a range of businesses.
April 2024, Cryptoniteuae