It’s been a month since Ethereum bid farewell to a key feature that shares its blockchain with Bitcoin (BTC). Dubbed the Ethereum Merge, the long-hyped upgrade has been widely celebrated with the blockchain ecosystem. However, to mainstream audiences, or even the average retailer, it felt more like Star Wars Day celebrated by sci-fi geeks than an early Christmas.
When the Ethereum merge took place on September 15th, the largest blockchain ecosystem parted ways with Proof-of-Work (PoW), the energy-hungry consensus mechanism that makes Bitcoin tick. The Ethereum blockchain is now working on a greener Proof-of-Stake (PoS) mechanism that does not require any mining activity, causing thousands of miners worldwide to scratch their heads.
Price-wise, Bitcoin has yet to be hit by the fundamental shift of its closest competitor. A full month has passed since the Ethereum merger and the BTC price is still stuck between $18,000 and $20,000.
However, the overarching mainstream narrative that “Bitcoin should contribute to the world, not destroy it by depleting energy resources” is being reinvigorated with Ethereum’s significant shift to a system that keeps the blockchain alive with minimal resource consumption.
Ethereum avoided a dead end
Cointelegraph reached out to industry insiders to get a clearer picture of the impact of the Ethereum merger on Bitcoin.
“PoW was a dead end for Ethereum,” says Tansel Kaya, lecturer at Kadir Has University and CEO of blockchain developer Mindstone, “because an unscalable Ethereum network cannot deliver on its promise.”
However, according to Kaya, the bitcoin community is not happy with the path of its biggest price competitor. The BTC community often criticizes PoS for being vulnerable to censorship, he noted, adding:
“If what [Bitcoin maximalists] let’s say Ethereum will morph into either a docile fintech network censored by governments or a centralized structure like EOS controlled by wealthy investors.”
Speaking to Cointelegraph, Gregory Rogers, CEO and founder of crypto-based gifts platform Graceful.io, noted that the merger has solidified the two disparate blockchains’ positions in the market. “Ethereum remains the transaction chain of choice with its increased speed and reduced fees,” Rogers said, adding, “Bitcoin is now the store of value of choice. They were already headed in that direction, but the merger just illustrates it.”
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From a price point of view, the founder and CEO of multichain marketplace UnicusOne, Tashish Raisinghani believes that the Bitcoin price will take a hit. “The crypto industry has had a rough time due to 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 it has yet to recover from the crackdown of Chinese mining in 2021.”
PoW is unrivaled in network security
Addressing the energy side of the argument, John Belizaire, CEO of green data center company Soluna Computing, told Cointelegraph that while moving from Ethereum to PoS could save energy, “it will also undermine the core aspect of cryptocurrency decentralization.”
Although bitcoin’s PoW consensus mechanism is energy intensive, it is also fundamental to the blockchain and “is the best choice for any cryptocurrency that prioritizes network security.”
Establishing flexible crypto mining centers with renewable energy facilities can help stabilize the power grid, solve the problem of renewable energy waste and provide crypto miners with an ample source of cheap energy, Belizaire added.
The Merge United Crypto Miners
Bitmain also lowered the prices of Antminers, its flagship crypto mining units, to help miners turn a profit again, adding:
Despite the merger, Ether (ETH) miners will not simply abandon PoW mining just because Ethereum Classic (ETC) is no longer mined, according to Anndy Lian, author of the book NFT: From Zero to Hero. Lian told Cointelegraph that the EthereumPoW (ETHW) project — the result of a post-merger hard fork — is working hard and the miner community is more united than ever.
“These various factors helped miners to balance their operating costs in this bear market and keep them afloat.”
Joseph Bradley, head of business development at Web3 service provider Heirloom, likened Bitcoin to “a global risk score that correlates with TradFi markets.” Bradley told Cointelegraph that while ether can be traded similarly, it still lacks the market depth and size of bitcoin. “Do we expect the world to become more or less chaotic in the years to come?” he asks rhetorically and replies:
“Most people would tend towards more chaos. Safety plays a role during this time. Bitcoin will become even more important. Expensive energy will lead to innovation among miners – they will most likely move towards positioning bitcoin mining as an extension of the power grid itself.”
Bitcoin and Ethereum: “Apples and Oranges”
However, not everyone agrees that the Ethereum merger will have an impact on Bitcoin. Martin Hiesboeck, head of research at crypto exchange Uphold, dismissed a direct comparison between Ethereum and Bitcoin as “apples and oranges.”
Hiesboeck told Cointelegraph that Ethereum is essentially a “company controlled by venture capitalists,” so the move to proof-of-stake aims to improve its economic and environmental credentials:
“Bitcoin doesn’t have to do that. Bitcoin is not a brand. Bitcoin is a computer network. Its output represents money. Nobody owns it. There is no brand. No CEO.”
Khaleelulla Baig, the founder and CEO of crypto investment platform Koinbasket, supported Hiesboeck’s argument, telling Cointelegraph that the merger won’t have a significant impact on Bitcoin since these assets serve different purposes.
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Bitcoin’s purpose, according to Baig, is “to prove itself as a superior store of value versus fiat currencies.” The PoW mechanism fits Bitcoin’s purpose well, “as it helps the network sustain the scarcity of 21 million BTC via its difficulty adjustment rate,” he added.
Bitcoin as a PoW and Ethereum as a PoS network make significant contributions to the crypto asset ecosystem by competing with their best attributes. Sums up Tansel Kaya: “Having two different approaches rather than one is better suited to the spirit of decentralization.”
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