In response to the high energy consumption of Bitcoin mining, PayPal has partnered with non-profit organizations Energy Web and DMG Blockchain Solutions to propose a solution that incentivizes miners to adopt low-carbon energy. The high energy consumption of the Bitcoin network has been a topic of discussion, with the Cambridge Bitcoin Electricity Consumption Index estimating that global Bitcoin mining will consume 121.13 TWh of electricity in 2023, the highest level since 2010, equivalent to Argentina’s national electricity consumption and surpassing Belgium’s 93.8 TWh.
PayPal, together with Energy Web, is developing a “Clean Energy Certification Platform” to encourage mining companies to adopt green energy. The platform allows Bitcoin miners to obtain low-carbon certification for their mining activities. The process involves identifying miners who use a sufficient proportion of low-carbon energy in their operations and marking their public keys as green keys. The green keys from different green miners are then aggregated into a multisignature address designated as the payment address to distribute incentives in Bitcoin. Transactions submitted to green miners will be prioritized with low transaction fees. When a green miner receives a transaction in their memory pool, they will need to include the transaction in a block and include an additional redemption transaction in the same block to consume the locked UTXO in the payment address and successfully mine the next block to receive Bitcoin rewards.
PayPal hopes that this research can improve and optimize the existing powerful network by proposing new cryptographic economic incentives. However, the paper does not provide much detail on the most important aspect, the additional Bitcoin rewards. Whether there will be sufficient incentives to attract miners to join is still unknown, as global miners are currently pursuing cheap energy sources. The news of this partnership may have influenced the performance of Energy Web’s token, $EWT, which has seen a 13.6% surge in the past 24 hours, reaching $2.32 with a market capitalization exceeding $116 million.
In 2022, BlackRock, the global asset management giant, mentioned that Energy Web is helping improve the transparency of green Bitcoin mining when launching its Bitcoin private trust, which significantly boosted the price of $EWT. Energy Web launched its Green Proofs for Bitcoin initiative that year, which is a way for Bitcoin miners to prove their use of renewable energy. With the collaboration with PayPal, it remains to be seen whether it can attract more energy companies to adopt this initiative.