It’s been a month since Ethereum said goodbye to a key feature that the blockchain shares with Bitcoin (BTC). Dubbed the Ethereum Merge, the long-running upgrade has been celebrated with the blockchain ecosystem. However, to the average audience or even the casual trader, it felt more like Star Wars Day celebrated by sci-fi pundits than early Christmas.
Since the Ethereum merger took place on September 15, the most comprehensive blockchain ecosystem detached from Proof of Work (PoW), the power-hungry consensus mechanism that makes Bitcoin tick. The Ethereum blockchain is now working on a more environmentally friendly Proof of Stake (PoS) mechanism that does not require any mining activities, leaving thousands of miners around the world confused.
On the price side, Bitcoin is not yet affected by the fundamental shift of its nearest competitor. A full month has passed since the Ethereum merger, and the price of BTC is still stuck between $18,000 and $20,000.
However, the overarching dominant narrative “Bitcoin should contribute to the world, not destroy it by exhausting energy resources” with Ethereum’s significant transformation into a system that keeps the blockchain alive with minimal resource consumption.
Avoid Ethereum dead end
Cointelegraph reached out to industry insiders to get a clearer picture of the impact of Ethereum Merge on Bitcoin.
“PoW has been a dead end for Ethereum, because the Ethereum network that is not scaling cannot deliver on its promise,” says Tansel Kaya, lecturer at Kadir Has University and CEO of blockchain developer Mindstone.
However, the Bitcoin community is not happy with the way the biggest price competitor has gone, according to Kaya. POS is often criticized by the BTC community for being vulnerable to censorship, he noted, adding:
“so what [Bitcoin maximalists] Assuming it’s true, Ethereum will either turn into a docile fintech network controlled by governments, or into a centralized structure like EOS, controlled by wealthy investors.”
Speaking to Cointelegraph, Gregory Rogers, CEO and founder of crypto-based gift platform Graceful.io, noted that Merge has boosted the two premium blockchains in the market. “Ethereum remains the preferred transaction chain with its increased speed and reduced fees,” Rogers said, adding, “Bitcoin is now the store of value of choice. They have already been going in that direction, but the merger is simply showing that.”
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In terms of price, though, UnicusOne founder and CEO of UnicusOne, founder and CEO of UnicusOne, believes that the price of Bitcoin will be affected. “The cryptocurrency industry had a hard time due to the macro-level challenges that led to the current bear market,” he said, adding that the merger would make Ethereum more sustainable compared to Bitcoin, “which has not yet been able to recover from the Chinese mining drive in 2021.”
PoW is unparalleled in network security
Speaking about the energy side of the controversy, John Belizere, CEO of environmental-focused Soluna Computing, an environmentally-focused data center, told Cointelegraph that while Ethereum’s switch to PoS could save energy, “it would undermine Also the fundamental decentralization aspect of cryptocurrency.”
Although the Bitcoin PoW consensus mechanism is power-intensive, it is also fundamental to the blockchain and “is the best choice for any cryptocurrency that prioritizes network security.”
Belisaire added that partnering with flexible crypto-mining hubs with renewable power plants can help stabilize the electrical grid, solve the problem of wasted energy in renewables, and provide an abundant source of cheap energy for crypto miners.
Crypto miners from Merge united
Bitmain has also cut prices for Antminers, the leading crypto-mining unit, to help miners recover profits, adding:
Despite the consolidation, Ethereum (ETH) miners will not simply give up Proof of Work mining just because Ethereum Classic (ETC) is no longer mined by mining, according to Andy Lien, author of the book NFT: From Zero to Hero. Lian told Cointelegraph that the EthereumPoW (ETHW) project – the result of a hard fork after the merger – is working hard and the miner community is more united than ever.
“These different factors have helped miners balance operating costs in this bear market, and keep them afloat.”
Joseph Bradley, head of business development for Web3 service provider Heirloom, has likened bitcoin to the “origin of global risk associated with the TradFi market.” Bradley told Cointelegraph that while Ether can be similarly traded, it still has neither the market depth nor the volume of Bitcoin. “Do we expect the world to become more or less chaotic in the coming years?” He asks rhetorically, and he answers:
Most people tend toward more chaos. Security is important during this time. Bitcoin will become more important. Exorbitant energy will create innovation with miners — they are likely to move toward positioning bitcoin mining as an extension of the electrical grid itself.”
Bitcoin and Ethereum: “Apples and Oranges”
Not everyone agrees that the Ethereum consolidation will have an impact on Bitcoin. Martin Hiesboeck, Head of Research at Crypto exchange Uphold, dismissed the direct comparison between Ethereum and Bitcoin as “apples and oranges.”
Hiesboeck told Cointelegraph that Ethereum is essentially a “capital-controlled company,” which is why the move to Proof of Stake aims to improve its economic and environmental credentials:
“Bitcoin does not need to do this. Bitcoin is not a brand. Bitcoin is a computer network. Its output is money. Nobody owns it. There is no brand. There is no CEO.”
Khalilullah Baig, founder and CEO of crypto investment platform Koinbasket, supported Hiesboeck’s argument, telling Cointelegraph that the merger would not have any measurable impact on Bitcoin because these assets serve different purposes.
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Bitcoin’s purpose is to “prove itself as a higher store of value for fiat currencies,” according to Beck. The Proof of Work (PoW) mechanism goes well with Bitcoin’s purpose, “because it helps the network maintain the scarcity of 21 million BTC through its modifiable difficulty rate,” he added.
Bitcoin as PoW and Ethereum as PoS make significant contributions to the crypto asset ecosystem by competing with its best features. Tansel Kaya summarizes: “Having two distinct approaches rather than one is more appropriate to the spirit of decentralization.”
Originally published at San Jose News Bulletin
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