Looks like 'Santa's beard" and that's Ok, but I would avoid paper towels in the future. They are treated to not break down and newsprint (no glossy or colored ink), or plain old brown cardboard does much better.
I would also slack off some on the veggie scraps, they can end up adding too much moisture to the bin and causing problems. I add them just every now and then. Coffee grounds are good and I add a banana peel or 2 to the can I collect the grounds in, it kicks the breakdown up a notch. Chicken laying crumbles sprinkled on the surface works a treat. The worms flat out love it and it's usually totally consumed within 2 days.
HTH
Wet