Bitcoin should move away from the “climate disaster” that is its proof-of-work (PoW) consensus mechanism, and instead, embrace a model where existing miners receive rewards without doing anything, Ripple’s Chairman and Co-founder Chris Larsen argued in a new proposal.
“The emerging solution among climate experts is that Bitcoin’s code needs to be changed to a low energy consensus algorithm like those used by nearly all other major crypto protocols,” Larsen advocated for a transition to the alternative proof-of-stake (PoS) algorithm.
He added that the main challenge to make such a change would likely be resistance by miners who have invested heavily in equipment, which would be rendered worthless in the event the protocol does transition to a PoS model.
To solve this problem, Larsen suggested that all existing Bitcoin miners can instead get paid a BTC reward based on their share of the current hash rate, without having to actually mine any coins with their electricity-guzzling machines.
“Existing miners would simply have rights to future bitcoin rewards without the need to expend additional energy or make additional investments in mining rigs,” Larsen wrote, adding that this could be subject to staking rules “to further secure the network.”
Lastly, the Ripple Chairman argued that his proposal could transition the Bitcoin network from “its current climate disaster status to a truly green financial technology of the future.”
The proposal has not been well received by bitcoiners, with for instance Nic Carter, co-founder of Coin Metrics and founding partner of Castle Island Ventures, also known for his analysis on Bitcoin mining, calling it “the stupidest idea I’ve come across this year.”
“Hey you know all those nice properties of PoW – unforgeable costliness, churn in the validation set, nonperpetual validation advantage? Let’s eliminate those,” Carter added.
The crypto derivatives exchange BitMEX’s own research team also did not appear to take the proposal from Chris Larsen very seriously:
Others have expressed support for PoW as the best approach for keeping the network decentralized.
Meanwhile, other industry observers suggested that the problem actually lies in the way the energy is generated.
“Energy consumption isn’t the problem, the means of how it’s currently generated is. If BTC used all solar, this wouldn’t be an issue,” one Twitter user wrote, adding that energy generation in the world needs to rise irrespective of bitcoin.
Discussing the proposal on Reddit, several users called it “dumb” to give future rights to receive BTC based on the current hash rate. “[…] Is this some sort of chess move I’m not seeing,” another user asked.
Moreover, concerns related to the energy use of PoW as a consensus mechanism have repeatedly been debunked in the past. According to Lyn Alden, founder of Lyn Alden Investment Strategy, many of the critics who attack Bitcoin’s energy use “start with the presupposition that it’s useless.”
“A trillion dollars in market cap disagrees,” Alden wrote earlier this year, adding: “Little concern is given to worldwide washing machine energy usage, for example, because we understand the value.”
This latest proposal from the Ripple chairman is not the first-time representatives for the company, which is associated with the XRP token, suggested changes to Bitcoin’s code.
The same also happened in March of this year, when Ripple’s Chief Technical Officer David Schwartz criticized Bitcoin’s PoW consensus mechanism.
The design of it is “such that true decentralization and disintermediation was never a possibility,” Schwartz said at the time, arguing that the miners are major stakeholders that are “trying to charge the highest fees they can get away with.”
Back then, Ripple’s CEO Brad Garlinghouse also offered his take on Bitcoin, saying it is “not ideal as a payment mechanism” because of the energy costs and associated carbon dioxide emissions.