Crypto

Ripple’s Pay-off Proposal to Get Bitcoin Miners to Switch to Proof of Stake

Ripple's Pay-off Proposal to Get Bitcoin Miners to Switch to Proof of Stake

Crypto Miners should see the trend away from PoW as “a net benefit for their lifespan,” according to billionaire Chris Larsen.

Chris Larsen, the Executive Chairman and Co-Founder of Ripple, has outlined his plan for Bitcoin miners to abandon Proof of Work (PoW), calling it “a net positive for their lifetime.”

He stated that it may improve the stock prices of publicly-traded mining companies because “any new code proposal would almost surely have to contain substantial incentives to earn their approval.”

The consensus technique that secures Bitcoin transactions on the blockchain is known as Proof of Work (PoW). While the Bitcoin network is the most secure and very dependable, the amount of energy required for BTC mining is a point of contention in the crypto community. Larsen posted on his blog last month on November 10:

“According to climate experts, Bitcoin’s code should be updated to a low-energy consensus algorithm similar to those employed by practically all other significant crypto protocols.” For example, whereas Bitcoin consumes the equivalent of 12 million US homes per year, alternate approaches could reduce this to less than 100.”

Ethereum has already completed half of the transition to Proof of Stake. While Larsen claims that this would make Bitcoin an “outlier,” he admits that most Bitcoin mining businesses would resist any comparable shift.

He has, however, provided a mechanism for distributing the “900 Bitcoin per day” from block rewards and the “roughly 2.1 million more Bitcoin through the year 2140.”

“Take a snapshot of the current hash rate of existing miners and then compensate miners on a pro-rata hash power basis,” he offers as the “least disruptive” solution to BTC’s energy dilemma.

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“Existing miners would simply have rights to future Bitcoin rewards without having to spend any additional energy or money on mining rigs.”
According to the millionaire industrialist, his idea would provide miners with “added economic benefit” and “lucrative gains” because they would earn the same amount of money while paying less in electricity bills.

“Future incentives […] may be retained and tokenized,” he proposed, adding that “although the process of enacting these ideas with consensus across the Bitcoin community will take time, the advantages far exceed the dangers.”

“These assets might be incredibly profitable for existing miners, particularly if Bitcoin transitions from its current reputation as a climate disaster to a truly green financial system of the future.”

Stronghold Digital Mining (SDIG), Hive Blockchain Technologies (HIVE), Canaan (CAN), Riot Blockchain (RIOT), BIT Mining (BTCM), Bit Digital (BTBT), Bitfarms (BITF), and Marathon Digital Mining (MDMG) are among the U.S. mining stocks mentioned by Larsen (MARA).

Needless to say, Bitcoiners — or miners who have ambitious aspirations to expand their part of the hashrate and would miss out on additional revenue if this plan were implemented — are unlikely to be enthusiastic about the recommendations. And, based on the debate over altering the blocksize, if the proposal were to gain traction, it would very probably result in a PoW fork.

The Author

Samuel Adeshina

Samuel is a financial reporter whose interests include blockchain, market, business, insurance, and Crypto to provide relevant information to all interested.