Ethereum Classic Leaps Into Turbulent Arena, says Vijay Dwivedi
By Team Newsable | First Published Aug 14, 2022, 6:34 PM ISTIndustrialist and entrepreneur Vijay Dwivedi says that the question now for investors is whether the factors behind the surge have legs.
In what came into light like a major merge this week was from the world of Ethereum. As Crypto miners have been showing increasing interest in Ethereum Classic because the Ethereum blockchain is in the process of moving from an energy-intensive proof of work system to proof of stake , which removes miner incentives. The process is known as the Merge.
Industrialist & entrepreneur Vijay Dwivedi predicts this as a move which will end up nowhere. Facts suggest that Ethereum mining currently makes up 97% of graphics processing unit (GPU) mining revenue and has a daily revenue of $24 million. However with the merge users will be able to validate transactions by ‘staking’ ETH rather than executing energy-intensive computations. Mr. Vijay foresees that with this move Miners will be forced to either sell their equipment or switch to mining ETC, which currently makes up 2% of GPU mining revenue and nets about $700,000 in daily revenue. This significant gap in profitability means that even if a “meaningful portion” of miners migrate to ETC, mining difficulty will increase drastically and render many miners unprofitable.
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Vijay says that the question now for investors is whether factors behind the surge have legs. Crypto’s history is ridden with buy-the-rumor, sell-the-news examples. Two recent data points occurred in April and October 2021, when Coinbase went public and the SEC approved the first bitcoin futures ETF, respectively. Each instance, telegraphed for weeks or months, represented a market top.
On the whole Expect more market volatility ahead, especially regarding these few assets. In addition, while the ethereum transition to PoS has gone according to plan so far, the September 19 transition is just a tentative date. Should the switch be pushed down the road, brace for renewed turmoil.
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