LiPOW for Bitcoin
Implementing Location Incentivized Mining Rewards for Proof of Work
Posted by sukru09347068 on April 10, 2018
2017's hot topic for Bitcoin was scalability. BTC was heavily criticized because it has low transaction speeds and can never survive as a currency with the rate of transactions it allows per minute. Lightning Lab's did a good job and we are closing down on scaling Bitcoin via off chain transactions.
Scalability issue is not 100% solved yet but in my opinion, there is a bigger issue and that is against the very own nature of Bitcoin. It is centralization. In 2017 over 70% of bitcoin mining was done in China due to low electricity costs and abundance of Asic hardware used for mining.
Incentives are the best influencers and with correct incentives, you can control the decentralization of mining. A method I could think about was distributing mining rewards based on incentives given according to the electricity costs. So if someone is mining in a region with higher electricity costs the smart contract could be designed to give out better rewards compared to someone mining in a region with lower electricity costs. The rewards could also fluctuate according to the weather as one requires more cooling in Phoenix, Arizona compared to Reykjavik. The rewards could also be adjusted to balance the supply of miners Worldwide.
I know it is hard to geo-locate something and there are multiple ways to fool the system. Simply put, Pokemon GO couldn't manage to stop people from misleading the GPS, but I am sure there will be a way in the future.