PayPal collaborates with Energy Web to launch green energy mining reward program.

The non-profit organization Energy Web announced a partnership with PayPal to launch the Green Mining Initiative, providing additional incentives to encourage Bitcoin miners to adopt green energy sources in order to address Bitcoin's energy consumption issues. The initiative is currently in the proof-of-concept stage.

Bitcoin Green Energy Mining Incentive Program

As more miners join the competition, under the PoW mechanism, miners need more powerful computing power and electricity consumption to sustain the competition, leading to the long-standing issue of energy consumption in the Bitcoin network.

This time, PayPal and Energy Web have launched the Green Mining Initiative to encourage miners to use more green energy for mining through additional incentive measures.

Implementation Concept of Green Mining Initiative

To reward miners using low-carbon energy in an automated and privacy-preserving manner, this program has a unique solution, with the implementation process as follows:

1. Identify green energy-using miners (referred to as Green Miners): Miners can apply for sustainable mining certification using existing Bitcoin green proof verification platforms such as Energy Web.
2. Collect public keys of Green Miners: Distribute incentive eligibility through public keys.
3. Integrate into multi-signature addresses: Aggregate public keys from different Green Miners into a multi-signature address with unspent transaction outputs (UTXO) of BTC assets, allowing any Green Miner to receive rewards from that address.
4. Initiate a transaction: Initiating a transaction from that address, if the identity of the miner who packages this transaction matches one of the multi-signatures, they qualify to receive the Bitcoin reward from that address. This additional transaction will have a receiving address belonging to a Green Miner.
5. Low transaction fees: To prioritize packaging this transaction for Green Miners instead of other miners, the transaction on the chain will be broadcast with lower transaction fees. For regular miners, there is no incentive to package this transaction due to the low fees; however, for Green Miners, it is a transaction eligible for additional income, so Green Miners are theoretically inclined to package this transaction.

Concept Validation of Green Mining Initiative

The Green Mining Initiative has already tested the above solution with Bitcoin miner DMG Blockchain Solutions Inc. Paypal is responsible for integrating institutions and various funds into the Bitcoin ecosystem.

The test proves that low transaction fees can indeed prevent non-Green Miners from packaging the transaction. However, if transactions are broadcast on the chain with too low fees or zero fees, these transactions may not be sent to any miners. This is because some Bitcoin nodes may use fee filtering mechanisms to decide which transactions to relay. Transactions with extremely low fees or no fees may be filtered out and not broadcasted to the Bitcoin network.

In addition, the multi-signature mechanism can identify which transactions are incentivizing miners. If there are not many participants incentivizing Green Miners in this way, a link can be established between specific VASPs for transactions and broadcasting transactions, reducing the privacy protection of participants.

Key Responses from Various Stakeholders

From the interesting design and concept validation of the project, it does have technical feasibility, but the most important source of rewards has not been clearly planned.

It is expected that rewards will come from government donations, non-profit organizations, mining facilities required to purchase carbon credits, etc., but this will depend on whether mandatory regulations emerge or there is a change in societal acceptance, rather than solely relying on platform design.

On the other hand, there needs to be a sufficient number of mining facilities willing to respond, use green energy, and join relevant verifications to realize its benefits. Therefore, whether meaningful progress in green energy mining can be seen seems to have a long way to go.

Miners have been continuously selling Bitcoin since the beginning of this year, upgrading hardware to cope with the halving impact.