Ripple Chairman's Reward Plan Convinces Bitcoin Miners to Adopt Proof-of-Stake

Ripple executive chairman and co-founder Chris Larsen has unveiled his plans to have Bitcoin miners ditch proof-of-work (PoW), saying they should see it as "a net benefit to their longevity."

He believes this could provide a significant boost to share prices of listed mining companies, “as any proposed new regulations will almost certainly include lucrative incentives to gain their support.”

PoW is the consensus algorithm that secures Bitcoin (BTC) transactions on the blockchain. While the Bitcoin network is the most secure and reliable, the energy required to mine Bitcoin has sparked endless debate in the cryptosphere. In a blog post on November 10, Larsen wrote:

“The solution climate experts are proposing is that Bitcoin’s code needs to change to a low-energy consensus algorithm, like that used by nearly every other major encryption protocol. For example, while Bitcoin uses the energy, but other methods may use less than 100 American households' energy."

Ethereum is already halfway through the transition to proof-of-stake. While Larsen said this would make bitcoin an "outlier," he acknowledged that any similar change would be opposed by the majority of bitcoin mining companies.

However, he proposed a solution to fairly distribute "900 bitcoins per day" from block rewards and "approximately 2.1 million additional bitcoins will be distributed until 2140."

He suggested that the "minimum disruption" solution to Bitcoin's energy problem is to take a snapshot of the current computing power of existing miners and then reward miners proportionally for their computing power. "

“Existing miners simply own the rights to future bitcoin rewards without expending additional energy or investing in mining rigs.”

The billionaire businessman explained that his plan would bring “additional economic benefits” and “profitable gains” to the miners, as they would receive the same income with lower operating costs in terms of electricity.

He suggested that “future rewards[…] could be held and tokenized,” concluding that “while it will take time to implement these schemes with Bitcoin community consensus, the benefits far outweigh the risks. "

“These assets could be very lucrative for existing miners, especially as Bitcoin transitions from its current state of climate disaster to a truly green financial technology of the future.”

Larsen singled out several U.S. mining stocks, including 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 (MARA).

Needless to say, these proposals are unlikely to be popular with bitcoin players — or rather, miners who have ambitious plans to increase their share of computing power, and will miss out on additional revenue through this plan. And judging by the controversy over changing the block size, if the proposal does gain some support, it will almost certainly result in a PoW fork.