PayPal's Blockchain Research Group is advocating for a novel approach to promote sustainable Bitcoin mining by introducing "cryptoeconomic incentives" to reward miners who utilize low-carbon energy sources. Collaborating with Energy Web and DMG Blockchain Solutions, PayPal aims to enhance the economic attractiveness of environmentally friendly mining practices within the Bitcoin network.

The proposal involves accrediting "green miners" using sustainable energy with special "green keys," which are tied to their public keys. Transactions would then be preferentially routed to these green miners, offering lower fees and an additional locked BTC reward in a multisig payout address accessible only to green miners.

By providing rational profit-driven miners with the opportunity to earn extra BTC rewards through sustainable practices, PayPal hopes to incentivize the adoption of low-carbon energy sources among miners.

The proposal leverages Energy Web's "Green Proofs for Bitcoin" platform, allowing miners to certify their operations based on clean energy usage and grid impact scores. Miners can register and share their green keys on the platform to participate in the incentive program.

PayPal BRG conducted successful tests of the proposed solution with Bitcoin miner DMG Blockchain Solutions Inc., broadcasting low-fee transactions to observe effectiveness under varying levels of on-chain transaction volume. The tests highlighted the potential for green miners to prioritize these transactions, contributing to their confirmation on the network.

While alternative approaches such as utilizing private channels like the Lightning Network or smart contracts exist, PayPal BRG emphasized the importance of achieving decentralization, ease of implementation, and trust independence in distributing incentives.

The proposal signifies PayPal's commitment to fostering sustainability within the cryptocurrency ecosystem and encourages further discussion and innovation in the field of environmentally conscious Bitcoin mining practices.